Capital Expenditures

Commodity Online  Nov 19  Comment 
Given the need to squarely address future supply side by manufacturing sector, reviving capex is essential to drive growth and create large employment opportunities, which is the cornerstone of the Government and rsquo;s agenda. and nbsp;
Financial Times  Nov 17  Comment 
Capital expenditure is a sign of confidence in future growth
Financial Times  Nov 10  Comment 
Five-month strike costs miner more than $300m
Wall Street Journal  Oct 30  Comment 
Brazilian mining giant Vale is reducing its capital expenditures in response to a recent drop in iron-ore prices that surprised the company’s management.
Reuters  Oct 30  Comment 
(Adds details on 2015 capital spending plans, updates stock price)
The Australian  Oct 28  Comment 
WORLEYPARSONS has frozen non-executive directors’ fees for a third straight year and approved only one fixed pay rise to an exec.  Oct 28  Comment 
LONDON (dpa-AFX) - European oil giant BP Plc. (BP.L, BP_UN.TO, BP) Tuesday said third-quarter profit dropped from the prior year, amid a decline in production. The company, however, hiked its dividend while reducing its forecast for full-year...
SeekingAlpha  Oct 16  Comment 
By The Critical Investor: I can recommend Roxgold Inc. (OTC:ROGFF) to any investor interested in junior mining companies, and I recently wrote an extensive article on the company to explain why. The company just arranged the $75M debt component of...  Oct 15  Comment 
Visit at for the full story.
The Economic Times  Oct 13  Comment 
Mukesh Ambani said RIL is investing close to $16 bn in expanding petrochemical production capacity & to lower feed & fuel costs to boost profits.


A Capital Expenditure is money a company spends to acquire or upgrade a business asset.

Common examples of a capital expenditure include the purchase of a new building, or the cost of significant upgrades to the equipment in an existing facility. In accounting, a capital expenditure is "capitalized", which means the cost or value of the underlying asset is adjusted for tax purposes and will now include the capital spent to upgrade it. A capital expenditure is considered to be deductible for tax purposes, because it represents an improvement to the business. But it cannot be deducted all at once, in the year in which the money was spent, if the property acquired or upgraded has a useful life longer than the taxable year. In this situation the capital expenditure is subject to Depreciation and Amortization and is deducted over the expected life of the item, rather than all at once, which is what happens with repair or maintenance expenditures.

Thus there is an important distinction between expenses that are "capitalized" by a company and those that are "expensed." A cost for repair or maintenance will appear on a company's Financial statement one time, as a cost incurred that month. But a capital expenditure will be amortized over multiple years, as the value of the underlying asset declines over time, on a company's balance sheet.

Capital expenditure is synonymous with 'capital spending' or 'capital expense' and is also know as CAPEX. The counterpoint of capital expenditures is Operating Expense or OPEX. This is the on-going cost for running a product, business, or system, as opposed to CAPEX which is the cost of developing or providing the parts necessary to make the product or system. For example, the purchase of a laptop computer is a capital expenditure, but the cost of the broadband internet subscription that a worker needs in using the computer is an operating expense.

Applications of CAPEX

Capex is commonly found on the Cash Flow Statement as "Investment in Plant Property and Equipment" or something similar in the Investing subsection. Publicly traded companies will often list their capital expenditures for the year in annual reports, which allows stockholders to see how the company is using their money and whether it is investing in its long-term future. Most companies have yearly capital expenditures as they consistently upgrade facilities and equipment.

Examples of CAPEX vs OPEX

  1. A company buys a copy machine (CAPEX); and buys toner and paper to operate it (OPEX).
  2. Installing a new bathroom in company offices (CAPEX); fixing the broken toilet so workers can use it (OPEX).
  3. Large media agency acquires a smaller media company in a cash-and-stock deal (CAPEX); pays the cost to move existing employees into the consolidated company's new offices (OPEX).
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