capital expenditure (capex)

Also called: capex, capital expenditure

Spending on assets that serve for years, such as equipment or a platform built in-house. It hits cash at once but reaches the P&L gradually through depreciation or amortization.

Capital expenditure (capex) is spending on assets that serve the business for more than a year: computers and servers, office fit-out, and in some cases software the company builds for itself. The opposite is operating expenditure (opex): costs used up within the period, such as salaries, marketing or a monthly software subscription.

Capex hits cash and the P&L at different times. The cash goes out at once and shows in the investing section of the cash flow statement. The P&L sees only a slice each year, as depreciation (for physical assets) or amortization (for intangible ones), over the asset's useful life. So a large purchase can leave profit almost untouched and the bank badly dented.

That timing is a lever. Moving a purchase to a stronger month, leasing instead of buying or paying in instalments changes the cash curve without changing the asset. Analysts often look at operating cash flow minus capex (free cash flow) to see what the business really has left after keeping its tools up to date.

Example

Klasna planned to buy new laptops for 432,000 UAH in August 2026, expecting them to serve 24 months.

Where	How it shows
Cash flow statement	−432,000 in investing, all in August
P&L	432,000 ÷ 24 = 18,000 of depreciation a month from September
Balance sheet	An asset of 432,000, shrinking by 18,000 a month

August was already the weakest month of the year. With the laptops, the forecast ended 31 August at −147,319.75; bought in September instead, the same month would end at −147,319.75 + 432,000 = 284,680.25. On profit the timing changes nothing; on cash it decides whether the company stays above zero.

Common mistakes

Judging a purchase by its effect on profit. The P&L sees a slice; the bank sees the whole price at once.
Buying in the weakest cash month. Timing, leasing or instalments can matter more than the price.
Capitalizing ordinary costs to lift profit. Only spending that creates a long-lived asset belongs in capex.
Forgetting replacement. Equipment wears out; plan the next purchase before it is due.

Learn it in the course

The cash flow statement and the three financial statements · How the three financial statements link, with a cash flow statement example: operating, investing and financing cash, built from profit with the indirect method.
Case: profitable on paper, short of cash in August · A year of profit and cash side by side: find what causes the cash flow problems, size the August gap and write a plan to fix it without panic borrowing.