Capital expenditure — or CapEx — is money a business spends on purchasing, upgrading, or maintaining long-term assets like buildings, machinery, vehicles, or technology. These are investments that will benefit the company for years.
For example, buying a new factory for $2 million or upgrading a server infrastructure for $500,000 are capital expenditures. Unlike regular expenses, CapEx is not fully deducted in the year of purchase — it is capitalized and depreciated over the asset's useful life.
CapEx appears on the cash flow statement and balance sheet, not the income statement (except through depreciation). High CapEx signals that a company is investing heavily in future growth.