Investing term

What is Capital expenditures (CapEx)?

Money spent on long-lived assets — buildings, equipment, software, improvements.

Capital expenditures (CapEx) is money a company spends on long-lived assets — factories, equipment, software, property — that will produce value for years. It appears in the investing section of the cash flow statement. Heavy CapEx can signal growth investment or just an expensive business to run; subtracting it from operating cash flow gives free cash flow, the cash truly left for owners.

For example

A retailer spending $500M to build new stores is recording CapEx — cash gone today, in hopes of more sales for the next decade.

Capital expenditures (CapEx) is taught hands-on in Stage 14 — Reading Financial Statements.

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Related terms

Accounts receivable (A/R)Money customers owe the company for goods or services already delivered but not yet paid.AccrualsAccounting entries that record revenue or expense before cash actually moves.Annual reportThe yearly disclosure that includes audited financials, MD&A, and footnotes — the primary source for serious investors.Balance sheetThe 'photo' statement — what the company owns, what it owes, and what's left for owners, on a single date.
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