What Is Capital Expenditure (CapEx)?

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)

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