Capital Expenditure (CapEx)

What is Capital Expenditure (CapEx)?

Capital Expenditure (CapEx) refers to funds used by a company to acquire, upgrade, or maintain physical assets such as property, industrial buildings, or equipment. CapEx is typically used for long-term investments to improve a company’s operations and capacity. It is often contrasted with operating expenses (OpEx), which cover day-to-day operational costs.

Types of CapEx

• Growth CapEx: Investments made to expand a company’s operations.
• Maintenance CapEx: Funds used to maintain or repair existing assets.
• Strategic CapEx: Investments in new technology or innovations to gain a competitive edge.

Benefits of Managing CapEx

• Long-Term Growth: Supports the expansion and scalability of the business.
• Improved Efficiency: Upgrades in equipment or facilities can enhance productivity.
• Asset Value: Increases the value and life span of company assets.

Related Terms and Concepts

Operating expenses (OpEx), asset management, depreciation, return on investment (ROI).