CapEx
AccountingDefinition
Capital Expenditures. Money spent acquiring, upgrading, or maintaining long-lived physical assets — buildings, equipment, infrastructure. Capitalized on the balance sheet (depreciated over years), not expensed immediately.
Two types: maintenance (replacing what wears out) vs. growth (expanding capacity). Free cash flow subtracts total capex; "owner earnings" (Buffett) subtracts only maintenance capex. Hard to distinguish from outside, but high-quality 10-Ks disclose it.
Two types: maintenance (replacing what wears out) vs. growth (expanding capacity). Free cash flow subtracts total capex; "owner earnings" (Buffett) subtracts only maintenance capex. Hard to distinguish from outside, but high-quality 10-Ks disclose it.