What does CAPEX stand for in financial terminology?

CAPEX stands for Capital Expenditures, which refers to the funds a company uses to acquire, upgrade, and maintain physical assets such as property, buildings, technology, and equipment. Understanding CAPEX is critical for analyzing a company's investment in its operational capabilities and long-term growth. Capital expenditures are usually made to enhance the productive capacity or operational efficiency of a business, and they are accounted for on the balance sheet as assets rather than expenses, distinguishing them from ongoing operational costs, which are considered operating expenses. This concept is vital for investors and analysts to assess how well a company is investing in its future and managing its resources effectively.