Capital Expenditures

The Economic Times  Feb 16  Comment 
The capex for the next fiscal year doesn’t include the $1.2bn, or Rs 8,000cr, ONGC has to pay for the purchase of GSPC’s stake in the KG Basin asset, the executive said.
The Hindu Business Line  Feb 15  Comment 
Will go public next fiscal year; to appoint lead managers: Chairman T Suvarna Raju
The Economic Times  Feb 8  Comment 
The company would fund the capital expenditure through debt.
The Economic Times  Feb 2  Comment 
The lack of any change in long term capital gains tax was sentiment-positive, while the unchanged corporate tax rate for large companies and income tax tweaking was line with Citi’s expectations, the report said.
The Economic Times  Feb 2  Comment 
While the market was widely expecting fiscal deficit to be 3.3-3.5% of GDP, the government has chosen to peg it at 3.2%
The Economic Times  Feb 1  Comment 
Investment as a percentage of GDP has declined to 29% in current fiscal (FY17), compared to 34% in fiscal 2012.
The Economic Times  Jan 31  Comment 
The Keynesian prescription of government expenditure seems to be the safest bet as the corporate sector is not enthusiastic enough to be driven by a monetary stimulus.
The Economic Times  Jan 24  Comment 
Reeling under severe capacity constraints resulting in acute congestion on trunk routes, Railways has set a massive investment target of Rs 8.5 lakh crore in five-year period.
The Economic Times  Jan 22  Comment 
The government has nudged state firms to invest big and quick to boost jobs and economic growth in the country as private investment has languished.


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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