Capital Expenditure
Capital Expenditure (CAPEX full form) is the expenditure made by a firm to improve its long-term assets or to purchase new equipment. It serves as a potent financial metric and helps financial analysts understand a company’s investment patterns.
What is Capital Expenditure
Capex meaning can be simply put as the sum of money invested by a company to acquire or even upgrade fixed or non-consumable assets.
CAPEX makes up the funds that business entities use to purchase, enhance or maintain long-term assets to boost the firm’s proficiency.
Typically, CAPEX is incurred to purchase long-term assets like – plant, equipment, building, machinery, furniture, and fixtures, among others. It also includes expenses incurred by way of purchasing intangible assets like licenses, trademarks, or patents.
It must be noted here that capital expenditure has a significant impact on a firm’s long-term and short-term financial standing. Resultantly, decisions about CAPEX are critical for the financial health and sustainability of a company.
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