Capital Expenditure (CapEx)
What is Capital Expenditure (CapEx)?
Capital expenditure refers to the funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, or equipment. These investments are capitalized on the balance sheet rather than being fully expensed in the period they occur.
Why It Matters
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CapEx is essential for maintaining operations and expanding the productive capacity of a business.
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It indicates a company’s commitment to long term growth and technological advancement.
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High levels of CapEx can impact short term cash flow but often lead to higher future earnings.
