Finance and accounting
Capex (capital expenditure)
Spending on long-lived assets such as machines and buildings.
Facts checked against sources onWhat does Capex (capital expenditure) mean?
Capital expenditure is money spent on assets that last more than a year, such as factories, machines and software. It is recorded on the balance sheet and then expensed gradually through depreciation or amortization, rather than counted as a cost all at once.
Where does it come up in case interview prep?
- Supply chains explainedLesson in How industries work: the toolkit
- Cost structures, margins and capital intensity across industriesLesson in How industries work: the toolkit
- A light balance sheet, and why profit is not cashLesson in Business basics for non-business learners
- Industry primers: airlines, pharma, software, energyLesson in Business basics for non-business learners
- How the three statements link: one company through all threeLesson in Reading a business through its numbers: the three statements, cash and value
- The cash flow statement, and why profit is not cashLesson in Reading a business through its numbers: the three statements, cash and value
- EBITDA versus operating profit versus free cash flowLesson in Reading a business through its numbers: the three statements, cash and value
- Valuation in practice: multiples, a simple DCF, NPV, IRR and paybackLesson in Reading a business through its numbers: the three statements, cash and value
Related terms
- Depreciation and amortizationSpreading the cost of a long-lived asset over its useful life.
- Opex (operating expenses)Running costs that are not part of COGS.
- Free cash flowCash from operations minus capital expenditure.
- ProfitThe money left over after costs. Revenue minus cost.
- RevenueMoney earned from sales, before costs.
- CostWhat it takes to make and sell the product in a period.
- Fixed costA cost that stays the same when volume changes, within a normal range.
- Variable costA cost that rises and falls with how much you make.
Learn it in context
See Capex (capital expenditure) at work in a lesson from How industries work: the toolkit, with checks as you go.
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