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The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is no guarantee of future results.
Capital expenditure, or CAPEX, is the term used for the money spent by businesses on physical assets. It’s an important part of understanding a company’s accounts.
Capital expenditure definition
Capital expenditure, or CAPEX, is the term used for the money spent by businesses on physical assets. It’s an important part of understanding a company’s accounts.
Businesses use capital expenditure in the development of new business, or as a long-term investment. That can mean buying a new office, developing a new warehouse, or fixing equipment within a factory.
CAPEX is defined as a physical asset that is either new or an extension of the usefulness of an existing asset. The asset being acquired or upgraded usually fits into one of three categories: property, industry (plant) or equipment.
In accounting, capital expenditures have their costs spread out over their useful lives, in a process called capitalisation: unless they are used to fix or maintain an already-held asset.
Operating expenses (OPEX), the short-term costs of running a business day-to-day, costs (and therefore taxes) are incurred in the given year.