Capital Expenditure (CAPEX)

Capital Expenditure (CAPEX) refers to the funds a company uses to acquire, maintain, or upgrade physical assets such as property, buildings, equipment, or technology. CAPEX is essential for sustaining and expanding a business's operations, as it covers long-term investments that provide future benefits. Unlike operating expenses (OPEX), which are short-term costs, CAPEX represents long-term investments that are capitalized on the balance sheet and depreciated over time.

Example

A tech company might invest in CAPEX by purchasing new servers and data centers to improve its infrastructure and expand its capacity for cloud services.