Capital Expenditure (CAPEX) and Operating Expenditure (OPEX)

A capital expenditure is money spent to acquire or upgrade physical assets such as equipment or buildings. It can also be a major business transformation exercise or a major software acquisition like SAP. Usually this cost is recorded in an account classified as property or a similar category of capital. The cost (except for the cost of land) will then be charged to depreciation expense over the functional life of the asset. The cost of the expenditure in capital assets is therefore spread over the useful life of the asset. This type of outlay is made by companies to maintain or increase the scope of their operations. Oil and gas, telecom, semiconductor, power, and other utilities are among the most capital-intensive industries that requir....