capital expenditure: meaning, definition, pronunciation and examples
C1Formal, primarily used in business, finance, accounting, corporate strategy, and economic reporting.
Quick answer
What does “capital expenditure” mean?
Money a company spends to buy, maintain, or improve its fixed assets (like property, equipment, technology). This spending creates long-term benefit (beyond one year) and appears on the balance sheet, not the income statement.
Audio
Pronunciation
Definition
Meaning and Definition
Money a company spends to buy, maintain, or improve its fixed assets (like property, equipment, technology). This spending creates long-term benefit (beyond one year) and appears on the balance sheet, not the income statement.
Investments in physical or intangible assets that increase the productive capacity, efficiency, or longevity of a business. It represents a strategic allocation of funds for long-term growth versus short-term operational costs (OPEX).
Dialectal Variation
British vs American Usage
Differences
No significant difference in core meaning or usage. The acronym 'CAPEX' is equally common in both varieties.
Connotations
Identical connotations of strategic investment, long-term planning, and significant financial commitment.
Frequency
Slightly higher frequency in American financial media and corporate reporting, but the term is standard in all major English business contexts.
Grammar
How to Use “capital expenditure” in a Sentence
[Company/Department] + approved/authorised + [sum] + in capital expenditure + on/for + [asset][Management] + is planning/reducing + capital expenditure + in + [area]Capital expenditure + on + [asset type] + increased/decreased + by + [percentage]Vocabulary
Collocations
Examples
Examples of “capital expenditure” in a Sentence
verb
British English
- The firm needs to capitalise this expenditure over ten years.
- They decided to expenditure a large sum on IT infrastructure.
American English
- The company plans to capitalize this expenditure over seven years.
- They are expending capital on a new fleet.
adverb
British English
- The funds were spent capital-expenditure-wise, on new machinery.
- They invested capital-expenditure-heavily in renewables.
American English
- The company allocates resources capital-expenditure-smart.
- They spent the money capex-appropriately.
adjective
British English
- The capital expenditure budget was overspent.
- A capital-intensive project requires high capital expenditure.
American English
- The capital expenditure approval process is rigorous.
- We have a capex-friendly fiscal climate this year.
Usage
Meaning in Context
Business
The board reviewed the five-year capital expenditure plan for new manufacturing plants.
Academic
The study correlated high capital expenditure in R&D with subsequent market share growth.
Everyday
(Rare in everyday conversation; might be simplified as 'big-ticket investments' or 'money spent on long-term equipment').
Technical
The new accounting standard requires stricter criteria for capitalising development costs as capital expenditure.
Vocabulary
Synonyms of “capital expenditure”
Strong
Neutral
Weak
Vocabulary
Antonyms of “capital expenditure”
Watch out
Common Mistakes When Using “capital expenditure”
- Using it for regular maintenance (which is often OPEX).
- Confusing it with 'operational budget'.
- Pronouncing 'expenditure' as /ɪkˈspen.daɪ.tʃər/ (wrong vowel).
FAQ
Frequently Asked Questions
It can be. If the software is a major purchase with a useful life beyond one year (like an enterprise database license), it is typically capitalised as CAPEX. Small, recurring subscriptions are usually OPEX.
CAPEX creates an asset on the balance sheet and is depreciated/amortised over time. OPEX is fully deducted from profits in the current accounting period.
Yes, governments also have capital budgets for long-term infrastructure projects like roads, schools, and hospitals, distinct from current spending on salaries and supplies.
It is commonly pronounced as a single word: /ˈkeɪ.peks/ (KAY-peks).
Money a company spends to buy, maintain, or improve its fixed assets (like property, equipment, technology). This spending creates long-term benefit (beyond one year) and appears on the balance sheet, not the income statement.
Capital expenditure is usually formal, primarily used in business, finance, accounting, corporate strategy, and economic reporting. in register.
Phrases
Idioms & Phrases
- “tighten the purse strings on CAPEX”
- “a CAPEX-heavy business model”
Learning
Memory Aids
Mnemonic
Think: CAPital EXpenditure = money spent on CAPacity-EXpanding assets.
Conceptual Metaphor
PLANTING SEEDS FOR FUTURE HARVEST (spending now for long-term growth).
Practice
Quiz
Which of the following is most likely classified as a capital expenditure?