Capital Expenditures (CapEx)

Category

Cash Flow

Units

Currency

US-GAAP elements

PaymentsToAcquirePropertyPlantAndEquipmentPaymentsToAcquireProductiveAssets

Reference

ASC 230, Statement of Cash Flows (investing activities)

Source

Reported in SEC EDGAR filings (US-GAAP XBRL taxonomy)

Capital expenditures are the cash a company spends during a period to buy, build, or improve long-lived physical assets, such as buildings, machinery, equipment, and technology infrastructure, that it uses to run its business rather than to resell. CapEx appears as an outflow in the investing section of the cash flow statement.

Because these assets serve the business for many years, their cost is capitalized on the balance sheet and expensed gradually through depreciation, instead of hitting the income statement all at once.

Companies usually tag capital expenditures in XBRL as PaymentsToAcquirePropertyPlantAndEquipment, which covers cash paid for physical assets used in normal operations, including assets the company builds for itself. Some companies report a broader line, PaymentsToAcquireProductiveAssets, that also includes purchased software and other intangible assets. Check which one a company uses before comparing CapEx across firms.

CapEx is a cash measure. Equipment bought on credit and not yet paid for at period end is excluded, as are assets obtained through finance leases. Both are noncash investing activities that ASC 230 requires companies to disclose separately. As a result, reported CapEx can understate the total investment a company made in its asset base during the period.

CapEx is the main deduction in free cash flow, calculated as cash from operating activities minus capital expenditures. Analysts often compare CapEx with depreciation. Spending that consistently runs well above depreciation suggests the company is expanding its asset base, while spending below depreciation for a long stretch can mean it is underinvesting.