What do you understand by capital expenditures?

Capital expenditures (CapEx) refer to the funds a company invests in acquiring, upgrading, or maintaining fixed assets such as property, buildings, machinery, and equipment. These expenditures are essential for long-term growth and operational efficiency, as they typically result in benefits that extend beyond a single accounting period. CapEx is typically recorded on the balance sheet rather than the income statement, reflecting its nature as an investment in the company's future.