CAPEX, or capital expenditure, refers to the funds a company spends to acquire, upgrade, or maintain physical assets such as buildings, machinery, and equipment. These investments are essential for a business to grow and improve its operational efficiency. Unlike regular operational costs, CAPEX is typically a one-time expense that provides long-term benefits. Companies often plan their CAPEX budgets carefully, as these expenditures can significantly impact their financial health. CAPEX is recorded on the balance sheet as an asset, and its costs are gradually expensed over time through depreciation. This process helps businesses manage their finances while ensuring they have the necessary resources for future growth.