Capital Expenditure (CapEx)

Intermediate 💰 Finance / Accounting

Definition

Money spent on acquiring or upgrading physical assets like buildings and equipment. The stuff that appears on your balance sheet as an asset, not just a sad expense line.

Example Usage

We approved a $5 million CapEx for new manufacturing equipment that will depreciate over 10 years.

Origin

From Latin 'capitalis' (of the head/chief)

Fun Fact

CapEx is why companies prefer CapEx to OpEx—you can spread the pain over multiple years instead of one painful year.

Source: Corporate finance standards

Related Terms

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COGS (Cost of Goods Sold)

Direct costs of producing goods you sell—labor, materials, and the despair of manufacturing.

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Allowance for Doubtful Accounts

A contra-asset account estimating receivables that customers will never pay, because optimism doesn't belong on a balance sheet. It's acknowledging reality before reality forces you to.

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Fiscal Year

A 12-month accounting period that doesn't have to match the calendar year, because apparently regular years weren't confusing enough. Companies pick fiscal years like kids pick team names, seemingly at random and with no regard for anyone else's convenience.

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Beginner

Payback Period

The time required to recover an initial investment through cash inflows. How long before your terrible investment decision stops being actively terrible.

💰 Finance / Accounting
Beginner

payout

The glorious moment when money actually leaves the vault and enters someone's pocket, whether it's dividends to shareholders or winnings to lottery players. In corporate speak, it's the amount distributed to investors who've been patiently waiting for their returns. The favorite word of anyone who's ever invested in anything, and the dreaded term for CFOs watching the bank account drain.

💰 Finance / Accounting
Intermediate

Amortization

The process of spreading the cost of something over time so it hurts a little bit every month instead of a lot all at once. It's the financial equivalent of eating an elephant one bite at a time, except the elephant is debt and you're never not eating.

💰 Finance / Accounting

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