Capital Expenditure, commonly known as CapEx, refers to the funds a company uses to acquire, upgrade, or maintain physical assets such as buildings, machinery, and equipment. These expenditures are essential for a business to grow and improve its operational efficiency. Unlike regular operational costs, CapEx is typically a long-term investment that can provide benefits over several years. CapEx is recorded on a company's balance sheet as an asset, rather than an expense on the income statement. This accounting treatment reflects the long-term value these investments bring. Companies often plan their CapEx budgets carefully to ensure they align with their strategic goals and financial capabilities.