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Home Resources Glossary Capital Expenditures

Glossary

Capital Expenditures

An investment a company makes in the fixed or capital assets of the company that have a useful life longer than one year or that are not intended for resale.

See Also

Depreciation.

Tips

Examples of fixed and capital expenditures include software, office equipment, buildings, land, factory, and equipment. Capital expenditures are sometimes subtracted from EBITDA by buyers when calculating the available cash flow of a business. Inventory is not a capital asset. Capital assets are usually depreciated as opposed to being expensed.

Related Resources

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Related Terms

C Corporation

A corporation that has been elected to be taxed as an entity separate from its shareholders in accordance with Subchapter C of the Internal Revenue Code. See Also S Corporation....

CAM

Abbreviation for “Common Area Maintenance Fee,” which is a fee paid collectively by the owners of individual units of a property for the maintenance and upkeep of the non-exclusive areas...

Capital Asset

An asset that has a useful life longer than one year and that is not intended for sale during the normal course of inventory. See Also Capital expenditures. Tips Examples...

Capital Gains

The profit earned from the sale of property that is held for more than one year. A tax on the profit earned from the sale of a capital asset. See...

Capitalization of Earnings

An earnings-based method of valuing a company by multiplying its earnings by an expected rate of return. Example $200,000 annual earnings x 20.0% capitalization rate = $1,000,000 valuation. See Also...

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