What is the implication if both depreciation and amortization, along with CapEx, are assessed at 10% of revenue into perpetuity?

When assessing the implications of depreciation and amortization, along with capital expenditures (CapEx) being set at 10% of revenue into perpetuity, it suggests that the company's maintenance costs are perfectly aligned with its revenue. In this scenario, the company is essentially reinvesting enough in its physical and intangible assets to sustain its current level of operations without any growth.

This means that while the company will maintain its current revenue levels, the same percentage is allocated to the upkeep of fixed and intangible assets as it generates in revenue. Hence, the company does not have excess cash flow to reinvest for expansion or growth, nor does it face a decline in size. It achieves a steady state where it continues to operate at a consistent scale indefinitely, maintaining its market position without increasing or decreasing in size.

Such a model is indicative of a mature company in a stable industry without significant growth prospects, thus indicating that it will remain the same size indefinitely.