capital expenditure

Meaning

This term refers to the money a company spends to buy, maintain, or improve fixed assets, such as buildings, vehicles, equipment, or land. It is often abbreviated as 'CapEx' in business discussions. Unlike operational expenses, these are long-term investments in the business's infrastructure.

Examples

• Our capital expenditure for the new manufacturing plant exceeded the initial budget.

  Our capital expenditure for the new manufacturing plant exceeded the initial budget.

• The CFO approved a significant capital expenditure to upgrade our IT infrastructure.

  The CFO approved a significant capital expenditure to upgrade our IT infrastructure.

• We need to distinguish between operational costs and capital expenditure in this report.

  We need to distinguish between operational costs and capital expenditure in this report.

• The company's annual capital expenditure has increased by fifteen percent this year.

  The company's annual capital expenditure has increased by fifteen percent this year.

• Investing in solar panels is a major capital expenditure that will pay off in the long run.

  Investing in solar panels is a major capital expenditure that will pay off in the long run.

Common Mistakes

• ✗ The company made a lot of capital expenses this year.

  ✓ The company had a lot of capital expenditure this year.

  While 'expense' is common, the formal accounting term is 'capital expenditure' (or 'expenditures' in the plural), which refers to long-term asset investments.

• ✗ Buying office paper is a capital expenditure.

  ✓ Buying office paper is an operating expense.

  Capital expenditure is only for long-term physical assets, not daily consumable supplies.

Related Expressions

Practice

• The board approved the ___ expenditure for purchasing the new warehouse.

  💡 The adjective referring to long-term corporate assets or funds.

  Show answer

  capital

• We must reduce our capital ___ to preserve cash flow during the economic downturn.

  💡 The noun meaning the action of spending funds.

  Show answer

  expenditure