What is Capital Expenditure?

Capital expenditure, or capex for short, is the fund used by a company to procure, maintain or improve its fixed assets. As it is typically an investment, we can figure out the capital expenditure from a company’s balance sheet. We can also calculate the capital expenditure using the capex equation:

Capex = Change in PP&E + Current Depreciation

Where, PP&E = Change in property, plant and equipment

Change in PP&E = PP&E during the current period – PP&E during the prior period

Usually at the top of the agenda for most CFOs, capex is highly strategic and its sourcing is not a straightforward process. Capital sourcing and capital sourcing management and planning are interdependent and therefore difficult to execute separately. Learn more about GEP’s capex or capital expenditure services.