{"id":10379,"date":"2023-04-12T09:11:52","date_gmt":"2023-04-12T03:41:52","guid":{"rendered":"https:\/\/www.tickertape.in\/glossary\/?p=10379"},"modified":"2023-04-12T09:12:11","modified_gmt":"2023-04-12T03:42:11","slug":"capital-expenditure","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/glossary\/capital-expenditure\/","title":{"rendered":"Capital Expenditure &#8211; Meaning, Features, Types, Capex vs Revenue Expenditure"},"content":{"rendered":"\n<p>As a firm strives to grow its business, it may incur a wide range of expenses. This may include small or insignificant short-term costs and other considerable long-term expenses.&nbsp;<\/p>\n\n\n\n<p><a href=\"https:\/\/www.tickertape.in\/glossary\/what-is-capital-definition-of-capital-types-and-its-importance\/\">Capital<\/a> expenditure essentially comprises the expenditure incurred by a firm to fund the purchase of new equipment and\/or enhance long-term assets. In other words, company funds directed toward purchasing new assets are categorised under capital expenditure. These expenditures are usually added to the cost of the asset or recorded in the balance sheet rather than expensing off in the income statement.&nbsp;<\/p>\n\n\n\n<p>Read further to know all about capital expenditure.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><img decoding=\"async\" loading=\"lazy\" width=\"800\" height=\"533\" src=\"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/04\/image-7.png\" alt=\"\" class=\"wp-image-10380\" srcset=\"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/04\/image-7.png 800w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/04\/image-7-300x200.png 300w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/04\/image-7-270x180.png 270w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/04\/image-7-300x200@2x.png 600w\" sizes=\"(max-width: 800px) 100vw, 800px\" \/><figcaption class=\"wp-element-caption\">Image source: https:\/\/www.dreamstime.com\/<\/figcaption><\/figure><\/div>\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_22 counter-hierarchy counter-numeric\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">You will Learn About: <\/p>\n<span class=\"ez-toc-title-toggle\"><a class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" style=\"display: none;\"><i class=\"ez-toc-glyphicon ez-toc-icon-toggle\"><\/i><\/a><\/span><\/div>\n<nav><ul class=\"ez-toc-list ez-toc-list-level-1\"><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tickertape.in\/glossary\/capital-expenditure\/#What-is-capital-expenditure\" title=\"What is capital expenditure?\">What is capital expenditure?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tickertape.in\/glossary\/capital-expenditure\/#Capital-Expenditure-All-You-Need-to-Know\" title=\"Capital Expenditure: All You Need to Know!\">Capital Expenditure: All You Need to Know!<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tickertape.in\/glossary\/capital-expenditure\/#Features-of-capital-expenditures\" title=\"Features of capital expenditures\">Features of capital expenditures<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tickertape.in\/glossary\/capital-expenditure\/#Types-of-capital-expenditures\" title=\"Types of capital expenditures\">Types of capital expenditures<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.tickertape.in\/glossary\/capital-expenditure\/#Capital-expenditure-examples\" title=\"Capital expenditure examples\">Capital expenditure examples<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.tickertape.in\/glossary\/capital-expenditure\/#Differences-between-capital-expenditure-and-revenue-expenditure\" title=\"Differences between capital expenditure and revenue expenditure\">Differences between capital expenditure and revenue expenditure<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.tickertape.in\/glossary\/capital-expenditure\/#Accounting-for-capital-expenditure\" title=\"Accounting for capital expenditure\">Accounting for capital expenditure<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.tickertape.in\/glossary\/capital-expenditure\/#Capex-formula\" title=\"Capex formula\">Capex formula<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.tickertape.in\/glossary\/capital-expenditure\/#What-are-efficient-capital-expenditure-budgeting-practices\" title=\"What are efficient capital expenditure budgeting practices?\">What are efficient capital expenditure budgeting practices?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.tickertape.in\/glossary\/capital-expenditure\/#How-to-manage-your-capital-expenditures\" title=\"How to manage your capital expenditures?\">How to manage your capital expenditures?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.tickertape.in\/glossary\/capital-expenditure\/#Importance-of-capital-expenditures\" title=\"Importance of capital expenditures\">Importance of capital expenditures<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.tickertape.in\/glossary\/capital-expenditure\/#Challenges-with-capital-expenditures\" title=\"Challenges with capital expenditures\">Challenges with capital expenditures<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.tickertape.in\/glossary\/capital-expenditure\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.tickertape.in\/glossary\/capital-expenditure\/#FAQs\" title=\"FAQs\">FAQs<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What-is-capital-expenditure\"><\/span><strong>What is capital expenditure<\/strong><strong>?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Capital expenditure (Capex) refers to the funds allotted by a company toward maintaining, enhancing and purchasing long-term assets with the aim of improving their capacity and efficiency.&nbsp;<\/p>\n\n\n\n<p>Typically capital expenditure funds the purchase of long-term assets such as machinery, equipment, building, furniture etc. It also includes intangible expenses such as trademarks, patents or licences. In fact, even R&amp;D may be accounted for under capital expenditure.&nbsp;<\/p>\n\n\n\n<div class=\"wp-block-uagb-advanced-heading uagb-block-d9c49ee1\"><h2 class=\"uagb-heading-text\"><span class=\"ez-toc-section\" id=\"Capital-Expenditure-All-You-Need-to-Know\"><\/span><strong>Capital Expenditure: All You Need to Know!<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2><\/div>\n\n\n\n<ul>\n<li>Capital expenditure is the capital a business spends for purchasing, maintaining and improving its long-term assets. Such expenditures are irreversible and attract <a href=\"https:\/\/www.tickertape.in\/glossary\/depreciation-meaning\/\">depreciation<\/a>\/amortisation costs.<\/li>\n\n\n\n<li>Capital expenditure differs from revenue expenditure, primarily in terms of expense and utilisation.<\/li>\n\n\n\n<li>Capital expenditure is accounted for on the asset side in the balance sheet and also depicted in the cash flow statement.<\/li>\n\n\n\n<li>Capital expenditure has numerous benefits, such as analysing free cash flow to the firm. However, some challenges in determining Capex include inaccurate data\/projections.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Features-of-capital-expenditures\"><\/span><strong>Features of <\/strong><strong>capital expenditure<\/strong><strong>s<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Let us understand the different features of capital expenditures:<\/p>\n\n\n\n<ol>\n<li><strong>Long-term effects<\/strong><\/li>\n<\/ol>\n\n\n\n<p>Decisions pertaining to capital expenditure generally tend to have long-term effects and will significantly impact a company\u2019s future. A company\u2019s budgeting process and long-term goals must be set before allocating capital expenditure.&nbsp;<\/p>\n\n\n\n<ol start=\"2\">\n<li><strong>Irreversibility<\/strong><\/li>\n<\/ol>\n\n\n\n<p>Capital expenditure may be difficult to reverse without causing losses to the company. Suppose a company purchases machinery for its business, and it fails to meet the desired requirements. Even if the company decides to sell it back, it may not recover the entire cost.&nbsp;<\/p>\n\n\n\n<ol start=\"3\">\n<li><strong>High initial costs<\/strong><\/li>\n<\/ol>\n\n\n\n<p>Capital expenditure comes with a substantial initial cost outlay to offer long-term benefits. Such cost shall be borne, keeping in mind the opportunity cost.<\/p>\n\n\n\n<ol start=\"4\">\n<li><strong>Depreciation<\/strong><\/li>\n<\/ol>\n\n\n\n<p>As capital assets are used in businesses, the capital expenditure incurred is added to the cost of the asset. The depreciation on such expenditure begins promptly and extends throughout the assets\u2019 useful lives.&nbsp;<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Types-of-capital-expenditures\"><\/span><strong>Types of <\/strong><strong>capital expenditure<\/strong><strong>s<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Let us understand the two types of capital expenditures<\/p>\n\n\n\n<ol>\n<li><strong>Maintenance expenditure&nbsp;<\/strong><\/li>\n<\/ol>\n\n\n\n<p>The expenses incurred in maintaining the current operating levels in a company, such as replacing old machinery with new ones or making additions to an existing property.&nbsp;<\/p>\n\n\n\n<ol start=\"2\">\n<li><strong>Expansion expenditure<\/strong><\/li>\n<\/ol>\n\n\n\n<p>The expenses incurred to enhance future growth at the company. These may include purchasing new machinery with the latest technology, acquiring additional land or property, entering new markets, etc.&nbsp;<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Capital-expenditure-examples\"><\/span><strong>Capital expenditure examples<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><img decoding=\"async\" loading=\"lazy\" width=\"540\" height=\"360\" src=\"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/04\/image-8.png\" alt=\"\" class=\"wp-image-10381\" srcset=\"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/04\/image-8.png 540w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/04\/image-8-300x200.png 300w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/04\/image-8-270x180.png 270w\" sizes=\"(max-width: 540px) 100vw, 540px\" \/><figcaption class=\"wp-element-caption\">Image source: https:\/\/<a href=\"https:\/\/www.tickertape.in\/glossary\/stock\/\">stock<\/a>.adobe.com<\/figcaption><\/figure><\/div>\n\n\n<p>Let us look at some of the capital expenditure examples.&nbsp;<\/p>\n\n\n\n<ul>\n<li>A company runs a cement production business with an existing capacity of 400MT. To keep up with the market demand, it decided to open a new production unit with a capacity of 500MT. The new unit will help the company in the long term and falls under capital expenditure.<\/li>\n\n\n\n<li>A company acquiring new equipment or technology to manufacture a vaccine or for R&amp;D can also come under capital expenditure.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Differences-between-capital-expenditure-and-revenue-expenditure\"><\/span><strong>Differences between <\/strong><strong>capital expenditure and revenue expenditure<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The primary difference between capital expenditure and revenue expenditure is that the expense incurred is long-term in the case of capital expenditure, while the reverse is true for revenue expenditure.&nbsp;<\/p>\n\n\n\n<p>Let us understand in detail how these expenses differ.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Characteristics<\/strong><\/td><td><strong>Capital expenditure<\/strong><\/td><td><strong>Revenue expenditure<\/strong><\/td><\/tr><tr><td><strong>Definition<\/strong><\/td><td>These are expenses incurred for upgrading or purchasing assets. These expenditures are added to the cost of the asset and recorded in the balance sheet.<\/td><td>These are expenses incurred for day-to-day business activities and are charged to the income statement as and when they are incurred.<\/td><\/tr><tr><td><strong>Duration<\/strong><\/td><td>The expenses and benefits are usually long-term.<\/td><td>The expenses are short-term, and the benefits are limited to the current accounting year.<\/td><\/tr><tr><td><strong>Frequency<\/strong><\/td><td>These expenses are usually non-recurring.<\/td><td>These expenses are incurred frequently.<\/td><\/tr><tr><td><strong>Depreciation<\/strong><\/td><td>Each year, depreciation is charged on capital expenditure.<\/td><td>Revenue expenditure is free of depreciation charges.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Accounting-for-capital-expenditure\"><\/span><strong>Accounting for <\/strong><strong>capital expenditure<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Capital expenditure is accounted for in the balance sheet. It is also recorded in the cash flow statement under \u201cCashflow from Investing Activities\u201d in the financial period it occurs. Since cash is spent for this expenditure, it is treated as an outflow in the cash flow statement.&nbsp;<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Capex-formula\"><\/span><strong>Capex <\/strong><strong>formula<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The formula for Capex is as follows \u2013&nbsp;<\/p>\n\n\n\n<p><strong>Capex = Net increase in PP&amp;E + Depreciation expense<\/strong><\/p>\n\n\n\n<p class=\"has-small-font-size\"><em>Here, PP&amp;E stands for Property Plant and Equipment<\/em><\/p>\n\n\n\n<p>Use <a href=\"https:\/\/www.tickertape.in\/screener\/equity?utm_source=glossary&amp;utm_medium=article&amp;utm_campaign=\" target=\"_blank\" rel=\"noreferrer noopener\">Tickertape Stock Screener<\/a> to find the capital expenditure of a company. Along with capex, you can use 200+ filters to analyse a stock and find the best ones. <\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"1024\" height=\"507\" src=\"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/04\/Screenshot-2023-04-10-at-4.46.58-PM-1024x507.png\" alt=\"\" class=\"wp-image-10385\" srcset=\"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/04\/Screenshot-2023-04-10-at-4.46.58-PM-1024x507.png 1024w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/04\/Screenshot-2023-04-10-at-4.46.58-PM-300x149.png 300w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/04\/Screenshot-2023-04-10-at-4.46.58-PM-1536x761.png 1536w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/04\/Screenshot-2023-04-10-at-4.46.58-PM-1024x507@2x.png 2048w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/04\/Screenshot-2023-04-10-at-4.46.58-PM-300x149@2x.png 600w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure><\/div>\n\n\n<h2><span class=\"ez-toc-section\" id=\"What-are-efficient-capital-expenditure-budgeting-practices\"><\/span><strong>What are efficient <\/strong><strong>capital expenditure<\/strong><strong> budgeting practices?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li><strong>Planning<\/strong><\/li>\n<\/ul>\n\n\n\n<p>The first and most critical step in Capex budgeting requires companies to lay out a clear and concise plan of their future goals and a well-defined project scope.&nbsp;<\/p>\n\n\n\n<ul>\n<li><strong>Budgeting<\/strong><\/li>\n<\/ul>\n\n\n\n<p>For better resource management, it is ideal to have separate budgets for capital and revenue expenditures.<\/p>\n\n\n\n<ul>\n<li><strong>Limit<\/strong><\/li>\n<\/ul>\n\n\n\n<p>It is essential to set a budget limit for capital expenditure for companies to account for and manage any financial risk.<\/p>\n\n\n\n<ul>\n<li><strong>Monitoring returns<\/strong><\/li>\n<\/ul>\n\n\n\n<p>Capital expenditure must be monitored at regular intervals to ensure the company has received the desired results.<\/p>\n\n\n\n<p>Additionally, a company can adopt the bottom-up approach. This ensures that all the concerned departments contribute to the budgeting process, which helps better utilise resources. Also, firms should focus on capturing accurate data from different departments to effectively monetise capital expenditure.&nbsp;<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"How-to-manage-your-capital-expenditures\"><\/span><strong>How to manage your <\/strong><strong>capital expenditure<\/strong><strong>s?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>It is crucial to manage capital expenditure effectively. Here are a few guidelines describing how companies can manage their capital expenditure.<\/p>\n\n\n\n<ul>\n<li><strong>Long-term objectives<\/strong><\/li>\n<\/ul>\n\n\n\n<p>The first step in managing capital expenditure is to clearly define long-term goals and objectives.&nbsp;<\/p>\n\n\n\n<ul>\n<li><strong>Expense requests<\/strong><\/li>\n<\/ul>\n\n\n\n<p>It is ideal to have a well-structured framework for cost-benefit analysis and to establish an expense approval framework.&nbsp;<\/p>\n\n\n\n<p>Lastly, note that you cannot write off capital expenditure expenses immediately. Instead, a regular depreciation will be levied on the purchased capital. Companies should keep this in mind to better manage finances.&nbsp;<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Importance-of-capital-expenditures\"><\/span><strong>Importance of <\/strong><strong>capital expenditure<\/strong><strong>s<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The importance of capital expenditures is outlined below:<\/p>\n\n\n\n<ul>\n<li>The assets purchased help in generating long-term benefits for the company.<\/li>\n\n\n\n<li>It can help analysts gain insight into the firm\u2019s <a href=\"https:\/\/www.tickertape.in\/glossary\/investment-meaning-types-how-to-invest-and-savings-vs-investments\/\">investment<\/a> activities.<\/li>\n\n\n\n<li>Capital expenditure is useful in calculating free cash flow for the firm.<\/li>\n<\/ul>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Challenges-with-capital-expenditures\"><\/span><strong>Challenges with <\/strong><strong>capital expenditure<\/strong><strong>s<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The challenges companies face related to capital expenditures are mentioned below:<\/p>\n\n\n\n<ul>\n<li><strong>Measurement<\/strong><\/li>\n<\/ul>\n\n\n\n<p>Companies often face problems when it comes to accurately measuring the costs involved.<\/p>\n\n\n\n<ul>\n<li><strong>Unpredictability<\/strong><\/li>\n<\/ul>\n\n\n\n<p>Uncertainties in the cost-benefit analysis may result in the desired outcome not meeting the projections.<\/p>\n\n\n\n<ul>\n<li><strong>Temporal speed<\/strong><\/li>\n<\/ul>\n\n\n\n<p>The capital expenditure costs and the associated benefits rely on considerable timeframes. This causes difficulties while establishing equivalence and estimating discount rates.&nbsp;<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Capital expenditure is required to maintain and enhance a company\u2019s operations. The requirement of capital expenditure can vary depending on the company\u2019s requirements and the nature of its business. Some businesses may be more capital-intensive than others. Efficient planning and management of capital expenditure budgeting help companies manage their operations effectively.&nbsp;<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"FAQs\"><\/span><strong>FAQs<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-uagb-faq uagb-faq__outer-wrap uagb-block-7ee2a2f7 uagb-faq-icon-row uagb-faq-layout-accordion uagb-faq-expand-first-true uagb-faq-inactive-other-true uagb-faq__wrap uagb-buttons-layout-wrap uagb-faq-equal-height\" data-faqtoggle=\"true\" role=\"tablist\">\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-f7830a47\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>Does a high capital expenditure signify better performance?<\/strong><\/span><\/div><p class=\"uagb-faq-content\">No. Some companies might incur a higher capital expenditure than others. This does not necessarily signify a better performance. One must compare the capital expenditure of the target company with companies of the same sector to gain a better idea.\u00a0<\/p><\/div>\n\n\n\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-2afb61ff\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>Is capital expenditure an expense?<\/strong><\/span><\/div><p class=\"uagb-faq-content\">No. Capital expenditure is treated and reported as fixed assets. However, the associated depreciation is charged as an expense over the asset&#8217;s useful life.\u00a0<\/p><\/div>\n\n\n\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-f6ddb6e6\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>Is capital expenditure tax-deductible?<\/strong><\/span><\/div><p class=\"uagb-faq-content\">No. Capital expenditure is not tax-deductible.\u00a0<\/p><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Capital expenditure essentially comprises the expenditure incurred by a firm to fund the purchase of new equipment and\/or enhance long-term assets. Read further to know all about capital expenditure.<\/p>\n","protected":false},"author":96,"featured_media":10267,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"spay_email":""},"categories":[1],"tags":[],"jetpack_featured_media_url":"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2.png","uagb_featured_image_src":{"full":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2.png",2086,1086,false],"thumbnail":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-150x150.png",150,150,true],"medium":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-300x156.png",300,156,true],"medium_large":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2.png",768,400,false],"large":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-1024x533.png",770,401,true],"1536x1536":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-1536x800.png",1536,800,true],"2048x2048":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-2048x1066.png",2048,1066,true],"authorship-box-avatar":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-150x150.png",150,150,true],"authorship-box-related":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-70x70.png",70,70,true],"post-thumbnail":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-270x180.png",270,180,true],"contentberg-main":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-770x515.png",770,515,true],"contentberg-main-full":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-1170x508.png",1170,508,true],"contentberg-slider-stylish":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-900x515.png",900,515,true],"contentberg-slider-carousel":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-370x370.png",370,370,true],"contentberg-slider-grid-b":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-554x466.png",554,466,true],"contentberg-slider-grid-b-sm":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-306x466.png",306,466,true],"contentberg-slider-bold-sm":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-150x150.png",150,150,true],"contentberg-grid":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-370x245.png",370,245,true],"contentberg-list":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-260x200.png",260,200,true],"contentberg-list-b":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-370x305.png",370,305,true],"contentberg-thumb":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-87x67.png",87,67,true],"contentberg-thumb-alt":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/03\/08-2-150x150.png",150,150,true]},"uagb_author_info":{"display_name":"Nikitha","author_link":""},"uagb_comment_info":0,"uagb_excerpt":"Capital expenditure essentially comprises the expenditure incurred by a firm to fund the purchase of new equipment and\/or enhance long-term assets. Read further to know all about capital expenditure.","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/posts\/10379"}],"collection":[{"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/users\/96"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/comments?post=10379"}],"version-history":[{"count":7,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/posts\/10379\/revisions"}],"predecessor-version":[{"id":10404,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/posts\/10379\/revisions\/10404"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/media\/10267"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/media?parent=10379"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/categories?post=10379"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/tags?post=10379"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}