Capital Intensive

An industry that requires high amounts of capital to operate in. A business is deemed to be capital intensive when the ratio of capital required to labor required is high.

Capital intensive industries include telecommunications, steel, electricity generation industry and other transportation industries such as railways and airlines.

Capital intensive industries usually have high barriers to entry and competition in the industry may be heavy. Since it may require the company to continuously have high capital expenditures just to retain its competitiveness(i.e. stay in the same spot), these companies may not be good investments unless they have a certain competitive advantage or demand for the good/service outstrips supply.

Capital intensive companies usually have high depreciation costs and a large amount of fixed assets.

Also see, labor intensive.

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