Capital Expenditure, often abbreviated as CapEx, encompasses a business's spendings directed towards acquiring, improving, or expanding its fixed assets. These assets, which include items like property, plant, and equipment, are essential for a company's continued operations and are expected to contribute to the business over the long term. Examples of CapEx include purchasing new machinery to increase production, upgrading IT infrastructure for enhanced processing capacity, or constructing new factory facilities.

Unlike operational expenditures, which are regular and recurring costs like salary or utilities, CapEx represents substantial investments that require careful consideration and approval within the company, often guided by budgetary control mechanisms. These expenses enhance the company's capacity or efficiency and are capitalized on the balance sheet rather than immediately deducted from income.

In financial reporting, CapEx is a critical line item in the cash flow statement under investing activities. For instance, an organization's budget may include a line for CapEx, stating expectations for expenditures like the refurbishment of office spaces or adding a new product line. This long-term planning is crucial for ensuring sustainable business growth.