Browse Definitions :
Definition

Capex (capital expenditure)

Contributor(s): Brita Van Fossen

A capital expenditure (Capex) is money invested by a company to acquire or upgrade fixed, physical, non-consumable assets, such as a building, a computer or a new business. Generally, there are two types of capital expenses: purchases made to maintain existing levels of operation within a company and purchases intended to foster future growth.

A capital expenditure can be tangible, such as a copy machine, or it can be intangible, such as patent. In many tax codes, both tangible and intangible capital expenditures are counted as assets because they have the potential to be sold if necessary.

To qualify as a capital expense, an asset's usefulness must exceed one year. In the United States, the length of depreciation is based on the number of years the asset is likely to be useful. For example, if a company purchases a fleet of servers for its data center, the value would depreciate over a five year period.

Capex can be compared to Opex, which stands for operational expenditure. Operational expenditures are used up during the same fiscal year they are purchased. If a company decided to spend money with Amazon Web Services (AWS) instead of purchasing servers, that expenditure would be operational and could only be deducted during the year in question. 

See also: enterprise asset management (EAM), cost management, adaptive enterprise, capacity planning, business impact analysis (BIA)

This was last updated in February 2015

Continue Reading About Capex (capital expenditure)

Join the conversation

1 comment

Send me notifications when other members comment.

Please create a username to comment.

Nice article, well I have a question regarding <a href="http://keydifferences.com/difference-between-capital-and-revenue-expenditure.html"> difference between capital and revenue expenditure</a> . I got my answer.
Cancel

-ADS BY GOOGLE

File Extensions and File Formats

SearchCompliance

  • California Consumer Privacy Act (CCPA)

    The California Consumer Privacy Act (CCPA) is legislation in the state of California that supports an individual's right to ...

  • compliance audit

    A compliance audit is a comprehensive review of an organization's adherence to regulatory guidelines.

  • regulatory compliance

    Regulatory compliance is an organization's adherence to laws, regulations, guidelines and specifications relevant to its business...

SearchSecurity

  • privilege creep

    Privilege creep is the gradual accumulation of access rights beyond what an individual needs to do his job. In IT, a privilege is...

  • BlueKeep (CVE-2019-0708)

    BlueKeep (CVE-2019-0708) is a vulnerability in the Remote Desktop (RDP) protocol that affects Windows 7, Windows XP, Server 2003 ...

  • endpoint detection and response (EDR)

    Endpoint detection and response (EDR) is a category of tools and technology used for protecting computer hardware devices–called ...

SearchHealthIT

SearchDisasterRecovery

  • disaster recovery team

    A disaster recovery team is a group of individuals focused on planning, implementing, maintaining, auditing and testing an ...

  • cloud insurance

    Cloud insurance is any type of financial or data protection obtained by a cloud service provider. 

  • business continuity software

    Business continuity software is an application or suite designed to make business continuity planning/business continuity ...

SearchStorage

  • Hadoop as a service (HaaS)

    Hadoop as a service (HaaS), also known as Hadoop in the cloud, is a big data analytics framework that stores and analyzes data in...

  • blockchain storage

    Blockchain storage is a way of saving data in a decentralized network which utilizes the unused hard disk space of users across ...

  • disk mirroring (RAID 1)

    RAID 1 is one of the most common RAID levels and the most reliable. Data is written to two places simultaneously, so if one disk ...

Close