What is Capital Expenditure?
Capital Expenditure
Capital Expenditure (CapEx) represents the cash spent by a startup to acquire, upgrade, and maintain physical assets like servers, office spaces, or machinery.
Detailed Deep Dive
Capital Expenditure (CapEx) represents investments in long-term physical assets. Modern software startups maintain low CapEx by utilizing cloud hosting, which is treated as operational spend.
Frequently Asked Questions
Q:How is CapEx treated on the income statement?
It is capitalized as an asset on the balance sheet and depreciated over its useful life, rather than expensed immediately.
Q:Why do SaaS startups have low CapEx?
Because they rely on cloud hosting (AWS/Azure) which is treated as operational expenditure (OpEx) rather than buying physical servers.
Quick Facts
- CategoryMetrics
- Key ApplicationAsset purchase budgeting and financial statement audits
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