what is net investment 
net investment is the total amount of money that a company spends on capital assets minus the cost of the depreciation of those assets this figure provides a sense of the real expenditure on durable goods such as plants equipment and software that are being used in the company s operations capital assets lose value over time due to wear and tear and obsolescence therefore subtracting depreciation from gross capital expenditure capex provides an accounting for the cost of the using up of the asset capital assets include all property and equipment that contribute to the productive capacity of the business net investment is a component of a nation s gross domestic product gdp in a nation s gdp the figure indicates gross private domestic investment it includes all expenditures by private companies and governments on real estate and inventories thus it is a leading indicator of a nation s potential economic production capacity understanding net investmentif gross investment is consistently higher than depreciation the net investment figure will be positive indicating that the company s productive capacity is increasing if gross investment is consistently lower than depreciation net investment will be negative indicating that productive capacity is decreasing companies with a declining capital base will probably not grow revenues as they will have fewer assets employed to try and achieve that growth so companies with net negative investment may be expected to shrink in future this is true for all entities from the smallest companies to the largest national economies 