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Capital expenditure

Cash spent on long-lived assets such as factories, machines, vehicles and capitalised software; an investing outflow, never an operating expense.

Capex is the cash version of what later becomes depreciation-accounting. Because it bypasses the income statement, a company can report strong ebitda while burning cash on equipment it must keep replacing.

Splitting it into maintenance-capex and growth capex is the analytical step that matters, though companies rarely disclose the split. A rough proxy is to treat depreciation as maintenance and the excess as growth.

Example: Northwind Tools spends $75M of capex against $64M of depreciation. Roughly $64M keeps the existing plant running and $11M funds a new assembly line, so growth capex is modest.

Related: maintenance-capex, free-cash-flow, property-plant-and-equipment, investing-cash-flow

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