Fundamental Glossary / Financial Statements
Capital Expenditure (CAPEX)
Cash spent to buy, build, or upgrade long-lived assets.
Formula
Often read from investing cash flow as purchase of property, plant and equipment, plus intangibles. Maintenance and growth capex are an analytical split, not always a reported one.
What it means
Capex is how the fixed-asset base is renewed and expanded. It is a cash outflow in investing activities, and it becomes an asset rather than an immediate expense.
Maintenance capex keeps current capacity. Growth capex adds capacity or new products. Only the second should be expected to lift future sales.
How to read it
Capex above depreciation for many years, followed by rising sales and stable returns, is investment that worked. The same spending with flat sales is capital that did not earn its keep.
What to watch
Companies can classify costs as capex to protect profit. The test is whether the spending created an asset that will produce future cash, not whether the label says capital.
This note explains the term. It is not a research recommendation, a target price, or a comment on any security. Ratios and regulatory thresholds change; use the latest filing or circular for a live figure.