Capital expenditure (also known as “capital expense,” “CAPEX,” or “capital cost”) is money that a company spends to acquire, maintain, or improve physical assets such as property, buildings, and equipment. These expenditures are typically long-term investments that are expected to generate future economic benefits for the company.
Examples of capital expenditures include purchasing land, constructing a new building, buying machinery or equipment, and renovating or upgrading existing assets. In contrast to operating expenses, which are incurred in the day-to-day operations of a business and are typically short-term in nature, capital expenditures are typically made to support the long-term growth and development of a company.