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

Powered by:

SearchCompliance

  • risk management

    Risk management is the process of identifying, assessing and controlling threats to an organization's capital and earnings.

  • compliance as a service (CaaS)

    Compliance as a Service (CaaS) is a cloud service service level agreement (SLA) that specified how a managed service provider (...

  • data protection impact assessment (DPIA)

    A data protection impact assessment (DPIA) is a process designed to help organizations determine how data processing systems, ...

SearchSecurity

  • computer worm

    A computer worm is a type of malicious software program whose primary function is to infect other computers while remaining ...

  • Single Sign-On (SSO)

    Single sign-on (SSO) is a session and user authentication service that permits a user to use one set of login credentials (e.g., ...

  • Certified Information Systems Auditor (CISA)

    Certified Information Systems Auditor (CISA) is a certification issued by ISACA to people in charge of ensuring that an ...

SearchHealthIT

SearchDisasterRecovery

  • business continuity plan (BCP)

    A business continuity plan (BCP) is a document that consists of the critical information an organization needs to continue ...

  • 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. 

SearchStorage

Close