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Cash flow

Capital Expenditures CapEx

The cash a company spends to buy, build, or upgrade long-lived physical and intangible assets like property, plant, and equipment.

Part of the Reading Financial Statements course · Lesson 30 of 33
Formula
Purchases of Property, Plant & Equipment (and capitalized intangibles)

What it is

Capital expenditures are the funds a company invests in long-lived assets — factories, equipment, buildings, technology, and similar items expected to be used for years. Because these assets benefit multiple periods, the spending is recorded on the balance sheet and expensed gradually through depreciation rather than hitting the income statement all at once. CapEx shows up as a cash outflow in the investing section of the cash flow statement.

Why it matters

CapEx reveals how much a company must reinvest to stay competitive and grow, and it directly reduces free cash flow. Analysts often split it into maintenance CapEx (keeping the existing business running) and growth CapEx (expanding it), though companies rarely report the breakdown. High CapEx is not inherently bad, but it should be judged against the returns the spending generates.

How it's calculated

It is taken from the cash flow statement, typically the line for purchases of property, plant, and equipment (and sometimes capitalized software). It is a cash outflow, so it is shown as a negative or subtracted figure.

How Quintarthai uses it

Capital expenditures appear in the investing section of the 10-year cash-flow statement under the Financials tab on each stock's company page and feed the free-cash-flow calculation.

Cross-border note. IFRS and US GAAP differ on capitalizing certain costs (for example, development costs can be capitalized under IFRS but are usually expensed under US GAAP), so reported CapEx can differ between a Canadian and a US filer.

FAQ

What is the difference between CapEx and operating expenses?
CapEx buys long-lived assets and is spread over time via depreciation, while operating expenses are day-to-day costs fully expensed in the period they occur.
Why does CapEx reduce free cash flow?
Free cash flow is operating cash flow minus capital expenditures, so every dollar spent on long-lived assets is a dollar less available to return to investors that period.
Related terms
See Capital Expenditures on a real company
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