Part of Speech

noun

Pronunciation

/ˈkæpɪtl ɛksˈpɛndɪtʃər/

Definitions

• Capital expenditure refers to the funds used by an organization to acquire, upgrade, or maintain physical assets, such as property, buildings, technology, or equipment.
• It is an investment in the future, where the benefits of the expenditure extend beyond the current financial year.
• In accounting, capital expenditure is recorded as an asset, and it is depreciated over its useful life.

Usage Examples

• The company’s capital expenditure for the new factory was significant, but it was expected to boost production in the long term.
• Capital expenditure on new machinery will allow the firm to increase its efficiency and output over the next several years.
• During the fiscal year, the government announced a rise in capital expenditure to improve infrastructure.

Etymology

The term "capital" comes from the Latin "capitale," meaning "wealth" or "property." "Expenditure" originates from the Latin "expendere," meaning "to pay out." Together, the term "capital expenditure" has been used to describe investments in long-term assets for business operations.

Synonyms

• Investment spending
• CapEx
• Capital investment
• Asset acquisition

Antonyms

• Operating expenditure (OpEx)
• Running costs
• Maintenance costs

Translations

Regional Pronunciation Variations

• In British English, "capital" is often pronounced with a stronger "a" sound, whereas in American English, it tends to be softer.
• In Indian English, the term is typically pronounced with clearer syllables and more emphasis on the word "expenditure."

Historical Usage

Capital expenditure has been a key concept in business and finance for centuries. It became more widely recognized during the industrial revolution when large investments in factories, machinery, and infrastructure were required. Over time, the term has been used more broadly to include all forms of long-term investment in assets, including technology and intellectual property.

Cultural Nuances

The significance and treatment of capital expenditure can vary by country and economic environment. In developed economies, businesses often make large capital expenditures to expand their production capacity or upgrade technology. In developing countries, capital expenditure may focus more on infrastructure, such as roads, energy production, and housing, which can influence the country's economic growth.

More Information

Capital expenditure is crucial for the growth and long-term sustainability of businesses. By investing in durable goods and infrastructure, companies aim to increase productivity, enhance their competitiveness, and secure future profitability. This type of spending is often contrasted with operating expenditure (OpEx), which focuses on day-to-day operational costs. Capital expenditures can also have significant tax implications, as they are subject to depreciation or amortization over time.