What Is Capital Expenditure (CapEx)?

Patrick Curtis

Reviewed by

Patrick Curtis WSO Editorial Board

Expertise: Investment Banking | Private Equity

Capital Expenditure (also known as CapEx) is the amount a company spends on the acquisition or upgrade of physical, tangible assets such as:

  • Property
  • Factories
  • Equipment

The relative amount of Capital Expenditure compared to the rest of the company's expenditure will depend on its growth targets and sector; large manufacturing or infrastructure-based companies tend to have very high proportions of Capital Expenditure compared to service firms.

Capital Expenditure is shown on the Cash Flow Statement under Cash Flow From Investing. When projecting future levels of PP&E on the Balance Sheet, the formula is:

  • (Previous Value of PP&E + Capital Expenditures - Depreciation)

Related Terms

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Patrick Curtis

Patrick Curtis is a member of WSO Editorial Board which helps ensure the accuracy of content across top articles on Wall Street Oasis. He has experience in investment banking at Rothschild and private equity at Tailwind Capital along with an MBA from the Wharton School of Business. He is also the founder and current CEO of Wall Street Oasis. This content was originally created by member WallStreetOasis.com and has evolved with the help of our mentors.