Definition
Capital Expenditure (CAPEX) comprises spending on acquiring, constructing or upgrading assets expected to provide benefits over an extended period.
Human Explanation
CAPEX covers spending used to create or develop an organisation’s assets.
Why it Matters
Capital expenditure affects the scale of a project, its financing and future maintenance costs.
Conceptual Boundary
CAPEX does not include the ongoing costs of operating an organisation.
Practical Perspective
Investment planning should consider both the amount of CAPEX and the operating costs that will follow.