OpEx vs. CapEx

CapExOpEx
DefinitionCapital expenditures are expenditures creating future benefits. A capital expenditure is incurred when a business spends money either to buy fixed assets or to add to the value of an existing asset with a useful life that extends beyond the tax year.OpEx (Operational expenditure) refers to expenses incurred in the course of ordinary business, such as sales, general and administrative expenses (and excluding cost of goods sold - or COGS, taxes, depreciation and interest).
Also Known AsCapital Expenditure, Capital ExpenseOperating Expense, Operating Expenditure, Revenue Expenditure
Accounting TreatmentCannot be fully deducted in the period when they were incurred. Tangible assets are depreciated and intangible assets are amortized over time.Operating expenses are fully deducted in the accounting period during which they were incurred.
In Throughput Accounting Money spent on inventory falls under capex.The money spent turning inventory into throughput is opex.
ExamplesBuying machinery and other equipment, acquiring intellectual property assets like patients.Wages, maintenance and repair of machinery, utilities, rent, SG&A expenses.

 

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Jason R. Firment

Director of Point of Sale
Phone: 800-354-9776 ext. 4230
Email: jfirment@bluestarinc.com