Capital Expenditure
Capital expenditure is investment in long-lived operating assets, with important differences between cash spending, accounting additions, and maintenance needs.
Compare capital expenditure, operating expenditure, and revenue when connecting accounting statements with cash flow and valuation models.
Capital expenditure, operating expenditure, and revenue connect a company’s operating model with its income statement, balance sheet, cash-flow statement, and valuation. Revenue measures recognized income from ordinary activities. Opex describes current operating costs under a stated definition. Capex records cash investment in long-lived assets, but accounting expense generally emerges over later periods through depreciation or amortization.
| Guide | Main question |
|---|---|
| Capital Expenditure | How much cash was invested in property, equipment, software, or other qualifying long-lived assets? |
| Operating Expenditure | Which costs support current operations, and how does the chosen definition map to reported expenses? |
| Revenue | When and how is income from ordinary activities recognized? |
A company can receive $120 of customer cash, recognize $100 of revenue, incur $70 of operating expense, and spend $20 on equipment in the same period. The equipment purchase is a cash outflow but is not necessarily a $20 income-statement expense in that period. Conversely, depreciation can reduce profit without matching current-period capital spending.
This timing difference is why EBITDA, operating income, operating cash flow, and free cash flow should not be treated as interchangeable.
This section is for financial education only and does not provide accounting, audit, tax, legal, valuation, securities, or investment advice.
Choose a subsection first. Deeper term pages live inside each subsection, which keeps large topic hubs readable.
Capital expenditure is investment in long-lived operating assets, with important differences between cash spending, accounting additions, and maintenance needs.