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VIDEO: What is Capex and Opex?
Highlights
- Business expenses can be split into two general categories - Capex and Opex.
- Capital expenditure (Capex) are costs incurred through investment in equipment, training or other assets that improve long-term performance.
- Operational expenditure (Opex) involves expenses incurred from daily activities such as wages and power bills.
It costs money to run a business, but there are two types of general expenses that all companies have to deal with and balance - Capex and Opex.
Capital expenditure (Capex) covers long term investments vital to the health of the company, while Operational expenditure (Opex) involves daily costs.
Each expense type influences the other, for example Capex spent on new equipment to win new business can lead to a higher Opex through wages to cover the extra staffing hours.
Balancing Opex and Capex is a dance every business must perfect, and investors look closely at these costs to gauge the health of a business.