Opex vS Capex
TWO KEY FINANCIAL CONCEPTS THAT ARE
CRUCIAL FOR MANAGING A COMPANY’S
FINANCES, PARTICULARLY IN TERMS OF
BUDGETING, ACCOUNTING, AND STRATEGIC
PLANNING.
OPEX
(OPERATING
EXPENDITURE)
CAPEX
(CAPITAL
EXPENDITURE)
ABDULAZIZ BAKRI, FMVA®
Capex DEFINITION:
: Capex refers to the funds used by a company to acquire,
upgrade, or maintain physical assets such as property,
buildings, technology, or equipment. These are long-term
investments intended to create future benefits.
IMPACT ON FINANCIAL
Balance Sheet:
Capex is recorded as an asset on the
balance sheet and is gradually expensed
through depreciation over the asset’s
useful life.
CASH FLOW:
Capex affects the cash flow from
investing activities, as these
EXAMPLES:
expenditures often require significant
cash outflows. 1-Purchasing Equipment
2- Building or Acquiring Property
3- Upgrading Infrastructure
4- Investing in Technology
ABDULAZIZ BAKRI, FMVA®
Opex
DEFINITION:
Opex refers to the day-to-day expenses incurred
by a company to keep its operations running.
These are short-term expenses that are typically
fully tax-deductible in the year they are incurred.
IMPACT ON FINANCIAL
Cash Flow:
Opex influences the cash flow
from operating activities.
P&L :
Opex is recorded on the income
statement and directly affects
the company's net profit.
EXAMPLES:
1- Salaries and Wages
2- Maintenance and Repairs
3- Marketing and Advertising
4- Rent and Utilities
5- Supplies
ABDULAZIZ BAKRI, FMVA®
