Capital expenditures, often abbreviated as CapEx, refer to the funds allocated by a company for the acquisition, improvement, or maintenance of long-term assets. These assets can include property, buildings, machinery, equipment, technology infrastructure, and other fixed assets that are vital for the company's operations and growth.

Capital expenditures are different from operational expenses (OpEx), which are incurred on a regular basis for day-to-day business activities. While operational expenses are typically recorded as immediate expenses on the income statement, capital expenditures are capitalized and spread over the useful life of the asset, reflecting their long-term value.

Companies make capital expenditures to enhance their production capabilities, expand their business, replace outdated equipment, and remain competitive in the market. These investments are strategic decisions aimed at generating future returns and increasing the company's efficiency and profitability.

Capital expenditures are often subject to careful evaluation and approval processes within a company. Financial analysis, budgeting, and forecasting are employed to assess the feasibility, potential returns, and risks associated with the investment. Additionally, companies may consider factors such as industry trends, market conditions, technological advancements, and regulatory requirements when determining their capital expenditures.