What is capex opex?

Capex and Opex are two important financial terms used in businesses.

Capex (Capital Expenditure) refers to the money a company spends on acquiring, upgrading or maintaining tangible assets such as buildings, equipment, vehicles, property, machinery or technology that will benefit the company in the long run. Capital expenditures are usually large, one-time expenses that are expected to generate future cash flows.

Opex (Operational Expenditure) is the ongoing cost of running the day-to-day operations of a business such as utilities, rent, salaries, raw materials, marketing and advertising expenses, insurance, repairs and maintenance, and other expenses that are necessary to maintain the business. These are recurring expenses that are incurred on a regular basis.

The key difference between Capex and Opex is that Capex is a one-time investment that generates future benefits, while Opex is the regular, ongoing expenses that keep the business running smoothly. In addition, Capex is usually recorded as an asset on the balance sheet, while Opex is recorded as an expense on the income statement.

A company’s decision to invest in Capex or allocate resources towards Opex depends on the company’s strategy, financial strength, and management’s priorities. Capital expenditures are typically used when businesses want to expand their operations, while operating expenditures are used for day-to-day operational expenses.