Examples of Capital Expenditures (CAPEX)
As a founder, you're always looking for ways to save money and increase efficiency. But what about investing in your company? When is the right time to do that? The answer is: it depends. Investing in your company can come in many forms, but one of the most common is CAPEX, or capital expenditure.
Capital expenditure is defined as "the cost of acquiring or improving long-term assets such as property, buildings, or equipment." In other words, it's money that you spend to improve your company's long-term prospects. This could be anything from buying a new piece of machinery to renovating your office space.
Discretionary CAPEX is optional; it's something that you choose to do because you believe it will improve your business.
Non-discretionary CAPEX, on the other hand, is mandatory; it's something that you have to do in order to keep your business running (think replacing an old piece of equipment that's reached the end of its useful life).
Now that we've gone over what CAPEX is and how it works, let's take a look at some examples of capital expenditures:
As a founder, you're always looking for ways to save money and increase efficiency—but sometimes investing in your company is the best way to do that. Capital expenditure is defined as "the cost of acquiring or improving long-term assets such as property, buildings, or equipment." In other words, it's money that you spend to improve your company's long-term prospects. This could be anything from buying a new piece of machinery to renovating your office space. There are two main types of CAPEX: discretionary and non-discretionary. Discretionary CAPEX is optional; it's something that you choose to do because you believe it will improve your business. Non-discretionary CAPEX, on the other hand, is mandatory; it's something that you have to do in order to keep your business running (think replacing an old piece of equipment that's reached the end of its useful life).