How is CAPEX defined?

Capital expenditure, often abbreviated as CAPEX, refers to the funds used by a company or organization to acquire, upgrade, or maintain physical assets such as property, buildings, industrial plants, technology, or equipment. This type of expenditure is critical for expanding a company's ability to generate future revenue and is typically reflected in a company's financial statements as an investment that will provide benefits over a long period of time.

CAPEX is distinct from operational expenditure (OPEX), which covers the ongoing costs for running a business, such as salaries, rent, and utilities. While CAPEX can involve significant financial outlay, often requiring careful planning and budgeting, it is an essential part of an organization’s strategy for growth and development.