what are capital expenditures

Capital expenditures, often abbreviated as CapEx, refer to the funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, technology, or equipment. These expenditures are designed to be used for long-term investments, meaning the assets purchased have a useful life of one year or more. They are distinct from operating expenses, which focus on short-term operating costs. Capital expenditures can include the acquisition of fixed or intangible assets, as well as the repair or improvement of existing assets. They are crucial for maintaining and enhancing the long-term value of real estate properties and are typically capitalized on the balance sheet and depreciated or amortized. Examples of capital expenditures include purchasing a piece of equipment, building a new factory, or acquiring fixed assets. The amount of capital expenditures a company is likely to have depends on the industry, with capital-intensive industries such as oil exploration and production, telecommunications, manufacturing, and utility industries having the highest levels of capital expenditures