Capital Expenditure

Cash or other consideration invested in long-lived productive assets, generally capitalized on the balance sheet rather than expensed entirely when acquired.

Why It Matters

Capital expenditure reveals reinvestment intensity and helps distinguish maintenance of existing capacity from expansion. It reduces current free cash flow but may create future operating cash flow, so its interpretation is central to valuation, financing requirements, and board capital-allocation policy.

Reading the Measure

A working relation and an interpretive limit for corporate-finance use.

Interpretive caution

A period's cash capital expenditure is not the same as the change in net fixed assets, which is also affected by depreciation, disposals, acquisitions, impairments, leases, and currency movements.

Accounting reference: SEC: Beginners' Guide to Financial Statements