Capital Expenditure.
In plain English
Capital expenditure is what a company invests in physical or long-term assets, such as buildings, machinery, vehicles, and major technology, rather than day-to-day operating costs. Because these assets last for years, their cost is spread over time on the books rather than expensed all at once. Strong, widespread capex is often read as a sign that businesses are confident about the future and investing to expand, which can support economic growth and, over time, corporate earnings.
01Why it matters
Capital spending signals how confident businesses are about the future, and rising capex across the economy can point to growth and support stock earnings.
02The math, step by step
A manufacturer spends 40 million dollars building a new plant and buying machines. That 40 million is capital expenditure, invested in assets that will produce for years.
03What this is NOT
Capital expenditure is NOT an operating expense. Operating expenses are the ongoing costs of running the business day to day; capex buys long-lived assets whose cost is spread over years.
Plain-English answers from our glossary. Receipts included. Never advice.
Educational tool. Answers come only from ClearMoneySchool's published glossary and are not advice. Why we never give advice