Capital expenditure (Capex)

Capex is short for capital expenditure. This is simply the purchase of fixed assets such as land, buildings and equipment for a business and it is often one of the biggest uses for a company’s cash flow.

Capex is short for capital expenditure. This is simply thepurchase of fixed assets such as land, buildings and equipmentfor a business and it is often one of the biggest uses for acompany's cash flow. Capex is usually split into two parts.

Maintenance capex refers to the money that is spent onreplacing worn out assets or bringing existing ones up to date.

Expansionary capex refers to any investment in new capacitydesigned to grow the sales and profits of the business.

The keypoint about capex is that a company has to get a good returnon the money it spends. Spending too much capex on poorprojects that deliver weak returns

Most Popular

Prepare your portfolio for recession
Investment strategy

Prepare your portfolio for recession

A recession is looking increasingly likely. Add in a bear market and soaring inflation, and things are going to get very complicated for investors, sa…
27 Jun 2022
Market crash: have we hit bottom or is there worse to come?
Stockmarkets

Market crash: have we hit bottom or is there worse to come?

For a little while, markets looked like they were about to embark on a full-on crash. And that could still happen, says Dominic Frisby. Today, he look…
27 Jun 2022
What the end of the 1970s bear market can teach today’s investors
Stockmarkets

What the end of the 1970s bear market can teach today’s investors

The 1970s saw the worst bear market Britain has ever seen, with stocks tumbling 70%. Things have changed a lot since then, says Max King. But there ar…
28 Jun 2022