Dictionary / Financial statements
What Is Capital Expenditure?
Capital expenditure, or CapEx, is money a company spends on long-lasting things like factories, machines, stores and data centers.
CapEx vs normal costs
Paying staff or electricity is a running cost used up right away. Buying a machine that lasts 10 years is CapEx. Instead of counting it all at once, the company spreads the cost over its life through depreciation.
Why CapEx matters
Operating cash flow minus CapEx gives free cash flow. A company that must spend heavily just to keep running has less cash left for owners.
Growth CapEx vs maintenance CapEx
Some CapEx just keeps things running, like replacing old trucks. Some builds new capacity, like a new factory. Big growth spending can be a good sign if the new projects earn good returns.
See it in real companies
Open a company to see what it sells and how it makes money.