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HOSP4040 Hotel Asset Management (Russell): Capital Expenditure/Investment

Capital Expenditure

Capital Expenditures (CapEx)

  • Funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, an industrial plant, technology, or equipment.
  • This type of financial outlay is also made by companies to maintain or increase the scope of their operations.
  • CapEx is any type of expense that a company capitalizes, or shows on its balance sheet as an investment, rather than on its income statement as an expenditure.
  • CapEx should not be confused with operating expenses (OpEx). Operating expenses are shorter-term expenses required to meet the ongoing operational costs of running a business. 
  • If an expense is a capital expenditure, it needs to be capitalized. This requires the company to spread the cost of the expenditure (the fixed cost) over the useful life of the asset.