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CapEx refers to investments that a company makes in order to acquire long-term corporate assets. In our business dictionary, we take a detailed look at the term CapEx and explain it using concrete examples. Here you will learn everything you need to know!

CapEx vs. OpEx: What is the difference between CapEx and OpEx?

CapEx (Capital Expenditures) and OpEx (Operating Expenses) are two different types of business expenses:

  • CapEx refers to investments in long-term assets such as buildings, land, machinery or equipment. These expenditures are typically large and are used to build, improve or expand the company's infrastructure. CapEx expenditures are typically recorded as assets on the company's balance sheet and depreciated over several years because they are expected to provide benefits over a longer period of time.
  • OpEx, on the other hand, refers to the general operating expenses associated with the day-to-day operations of the business. These include expenses such as rent, salaries, utilities, marketing and sales, office supplies, and other similar costs. These expenses are usually recorded in the company's income statement and have a direct impact on the company's profit in a given fiscal year.

In a nutshell, CapEx differs from OpEx in that CapEx is spending on the long-term investment in assets of the business, while OpEx is spending on the day-to-day operations of the business.

Examples CAPEX vs. OPEX

Building Raw materials for production
Machines Rent
Land Personnel expenses
Spare parts Leasing fees
Computer systems License fees
Office equipment Interest expense
Vehicles Depreciation

How is CapEx calculated?

Die Berechnung von CapEx (Capital Expenditures) hängt von der Art der Investition ab, die das Unternehmen tätigt. Im Allgemeinen umfasst CapEx jedoch alle Ausgaben für den Kauf, die Verbesserung oder Wartung von langlebigen Vermögenswerten wie Gebäuden, Maschinen oder Ausrüstungen. Es gibt verschiedene Methoden, um CapEx zu berechnen, hier sind zwei gängige Ansätze:

  1. Direct Method: The direct method of calculating CapEx is to determine the total expenditure on assets in the fiscal year and then deduct the amounts for the disposal or sale of assets in the same fiscal year. The formula is:
    CapEx = Total expenditure on assets - Proceeds from the sale of assets
  2. Indirect Method: The indirect method of calculating CapEx is through depreciation of long-lived assets. The formula is:
    CapEx = Depreciation and amortization + Change in carrying amount of assets

    The change in the carrying amount of assets is calculated by deducting the carrying amount of the asset at the end of the year from the carrying amount of the asset at the beginning of the year.

It is important to note that the calculation of CapEx may vary by company and industry, and that the choice of calculation method may vary by company.

What is CapEx planning?

CapEx planning is an important part of a company's financial planning, planning for long-term investments in assets such as buildings, machinery or equipment. It refers to the processes and procedures companies use to plan and manage their capital expenditures for the coming years.

CapEx planning can help ensure the company's financial stability and growth potential by ensuring that the company has sufficient resources to meet its future plant and equipment needs. Planning can also help improve the company's efficiency and profitability by ensuring that investments are targeted to those assets that will contribute most to increasing the company's value.

It typically involves a careful analysis of the estimated costs of acquiring and maintaining assets, identifying major capital projects, and determining the time frame for their implementation. CapEx Planning may also include an evaluation of financing options for capital expenditures, including internal financing and external financing through debt or equity offerings.


Is rent CapEx?

No, rent is generally not considered CapEx (Capital Expenditures).

Rent is an expense for the use of premises or equipment that a company does not own. It is a periodic expense, usually recorded as part of operating expenses (OpEx) and reported on the company's income statement.

However, it is important to note that there may be exceptions, particularly for long-term leases. In some cases, a long-term lease with an option to purchase or a lease-purchase agreement may be considered CapEx because the entity has the benefit and control of the asset through the agreement and the asset may become the property of the entity at the end of the agreement. However, a lease is generally not considered CapEx.

Are repairs CapEx?

No, repairs are generally not considered CapEx (Capital Expenditures).

Repairs are generally short-term expenditures to repair or maintain damaged or defective assets. They are usually recorded as part of operating expenses (OpEx) and reported on the company's income statement.

However, there are exceptions, especially when major repairs or modernizations are involved that can significantly increase the value or useful life of the asset. In this case, repairs or modernizations may be considered CapEx. However, an exact classification as CapEx or OpEx depends on the individual situation and should be documented accordingly in the company's accounting.

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