HOMEPAGE

Capital Expenditures (CapEx)

Definition

Capital Expenditures (CapEx) represent the money a company spends on long‑term assets such as property, equipment, and technology.

$$\text{CapEx}=\text{Cash Spent on Long‑Term Assets}$$

CapEx appears in the investing activities section of the cash flow statement.

Why It Matters

• Essential for maintaining and expanding operations.
• Reduces free cash flow in the short term but supports long‑term growth.
• High CapEx often indicates investment in future capacity.
• Low CapEx may signal efficiency — or underinvestment.

Types of CapEx

• Growth CapEx: Expands capacity (new facilities, new equipment).
• Maintenance CapEx: Keeps existing assets running.

Example

A company spends:

• $70 million on new equipment
• $30 million on maintenance

Total CapEx = $100 million