Definition
Capital expenditures are investments in long-term assets that generate benefits over multiple years. CapEx includes maintenance capex (keeping existing assets running) and growth capex (expanding capacity). It's subtracted from operating cash flow to calculate free cash flow.
Formula
CapEx = PP&E (current) - PP&E (prior) + Depreciation
Example
A company spent $15M replacing old equipment (maintenance) and $25M building a new facility (growth). Total capex: $40M, with growth capex indicating expansion investment.
FAQ
What is Capital Expenditures (CapEx)?
Spending on fixed assets like property, equipment, and facilities.
How do you calculate Capital Expenditures (CapEx)?
A common formula for Capital Expenditures (CapEx) is: CapEx = PP&E (current) - PP&E (prior) + Depreciation
Why is Capital Expenditures (CapEx) important?
Capital Expenditures (CapEx) helps investors evaluate fundamental analysis and make more informed decisions.