At Alunta we have decided to createa a dictionary for words and important terms related to running a subcription busniess. You are now reading about “Capital Expenditure (CAPEX)”.
Capital Expenditure (CAPEX) is the money a company spends to buy, maintain, or improve its fixed assets such as buildings, vehicles, equipment, or land. It is considered a capital expense and it influences the financial health of a subscription business. A high CAPEX might mean that the company is investing in its future growth or productivity. However, it can also indicate that a company is investing too much in fixed assets and might face liquidity problems. On the other hand, a low CAPEX might be a sign of under-investment, which could jeopardize future growth and profitability.
CAPEX and OPEX are two types of business expenses. CAPEX, or Capital Expenditure, refers to the funds used by a company to acquire or upgrade physical assets such as property, buildings, an industrial plant, or equipment. This type of spending is often used to undertake new projects or investments, therefore, it's an investment in the future of the business. On the other hand, OPEX, or Operational Expenditure, refers to the costs associated with the day-to-day operations of a business. In a subscription business, OPEX may include costs like wages, utilities, and maintenance.
Check out other topics in our subscription dictionary below. We've gathered the ones we find most relevant in relation to capital expenditure (capex).
