Capital Spending or NCS is used to represent the difference between capital expenditure (CAPEX) and depreciation. It is also relative to the growth of the company. As per net capital spending formula, to find the capital spending of a firm, subtract the beginning fixed assets from the ending fixed assets, and then subtract the obtained value from depreciation value to get the result. A company with the faster growth rate incurs higher net capital spending than one facing the slower growth rates.
Net Capital Spending is appropriate for the company’s fixed assets, which refers to the tangible fixed assets. It is also the difference between the expenditure and depreciation that the company makes in fixed asset. The net capital spending formula is essential to estimate the growth of the company.