capital expenditures (CapEx)
The term CapEx (Capital Expenditures) originates from business administration. It refers to the capital employed for long-term capital goods, for production facilities, real estate, computer systems, peripheral equipment, etc. Especially in equipment-intensive industries or in data centers, CapEx is an important accounting parameter.
Managing the optimal use of capital for capital-intensive investments is a long-term strategy that must take into account the entire life cycle of the capital goods. The right investment timing, the best financing as well as the improvement of the production process associated with the investment or in the case of computer technology, the increase in the performance of a computer system.
CapEx costs are among the assets that increase on-balance sheet assets and are depreciated over longer periods of time. CapEx reflects the costs of initial equipment, renewals, expansions, spare parts, interest, and depreciation for capital equipment. Expenditures for operating activities, on the other hand, are not included in CapEx but in Operating Expenditures( OpEx).