Decoding Capital Expenditure- Understanding Its Definition and Significance

What is meant by capital expenditure? Capital expenditure, often abbreviated as CapEx, refers to the spending made by a company or organization on acquiring, improving, or maintaining long-term assets. These assets are typically non-current in nature and are expected to provide economic benefits over a period of more than one year. Unlike operational expenses, which are incurred for day-to-day business activities, capital expenditures are investments aimed at enhancing the company’s productive capacity, efficiency, or value. This article will delve into the concept of capital expenditure, its importance, and how it impacts a company’s financial health.