Capital investment refers to the funds that a business allocates to acquire or upgrade physical assets, such as machinery, buildings, or technology. This type of investment is essential for companies looking to expand their operations, improve efficiency, or increase production capacity. By investing in these assets, businesses aim to generate future profits and enhance their overall value. Capital investments can also include investments in research and development to innovate new products or services, which can lead to long-term growth and competitiveness in the market.