Capital Expenditure (CapEx)
Funds used by a company to acquire, maintain, or improve physical assets such as property, equipment, or technology.
What is CapEx?
Capital expenditure (CapEx) refers to funds a company invests in acquiring, upgrading, or maintaining long-term physical assets — property, plant, and equipment (PP&E). CapEx appears on the cash flow statement under investing activities and is capitalized on the balance sheet, meaning the cost is spread over the asset's useful life through depreciation rather than expensed immediately. CapEx is divided into maintenance CapEx (replacing worn assets to maintain existing productive capacity) and growth CapEx (expanding capacity or building new capabilities). Unlike operating expenses (OpEx), which are expensed in the period incurred, CapEx creates long-term value. Free cash flow (FCF) is calculated by subtracting CapEx from operating cash flow.
Example
In FY2024, Amazon spent approximately $77 billion in capital expenditures — predominantly on fulfillment center construction, delivery infrastructure, and AWS data center expansion (growth CapEx), plus maintenance of existing facilities. This $77 billion is recorded on Amazon's cash flow statement under investing activities and depreciates over 5–40 years depending on asset type.
Source: Amazon 10-K FY2024