What does capex mean?
Capital expenditure, or capex, is money spent on things a business uses for many years. Examples are factories, machines, stores, data centres and software.
Day-to-day costs such as salaries and raw materials are not capex. They are used up within the year.
Where does it appear in a filing?
Capex sits in the investing part of the cash flow statement. It is shown as payments to acquire property, plant and equipment, and intangible assets.[S1]
Only spending that creates an asset on the balance sheet can be counted there.[S1]
How does it affect profit?
The cost is not charged to profit in one go. It is spread over the asset's useful life as depreciation.
Why compare capex with cash from operations?
Cash from operations is what the business brings in. Capex is what it puts back into assets. The gap between them is free cash flow.
Capex comes in waves. A company building a new plant may spend several years of cash in one or two years.
The amount varies widely by industry. A steel maker needs furnaces, while a software firm mostly needs laptops and offices.