Capital expenditures
Cash spent on acquiring or upgrading property, plant, and equipment. Splits into maintenance capex (sustaining current capacity) and growth capex (expanding capacity).
Capex = Property, plant, and equipment additions (cash basis)Capital expenditures are the cash spent acquiring or upgrading the productive asset base — property, plant, equipment, and capitalized software in some accounting regimes. Capex is reported as a single line on the cash-flow statement, but the analytically interesting decomposition splits it into maintenance capex (the spending required to sustain current revenue and capacity) and growth capex (the spending that expands the asset base). Maintenance capex roughly equals depreciation in a steady-state business; growth capex is the excess. The split matters for valuation because owner earnings (net income plus D&A minus maintenance capex) is a more honest run-rate cash measure than free cash flow during heavy-investment periods. Maintenance capex is rarely disclosed cleanly. We typically approximate it as depreciation expense (the simplest proxy) or as the historical capex-to-revenue ratio applied to a normalized revenue base, then triangulate against management commentary in earnings calls and 10-K MD&A sections.