Capital expenditure refers to the expenditure that the benefits of acquired property or services can be extended to multiple accounting periods. Capital expenditure is the main investment for the company to expand its business. Including the purchase of long-term assets such as facilities and production equipment. Usually it is a one-time consumption. In the business activities of an enterprise, fixed assets, intangible assets, deferred assets and other assets that have been used for a long time and whose economic life will experience multiple accounting periods should be regarded as capital expenditures.

Capital expenditure can be further subdivided into "maintenance capital expenditure" and "growth capital expenditure". The former refers to the capital expenditure required for existing assets to maintain the existing production and operation level of enterprises, while the latter is mainly used for purchasing new assets or expanding the scale of existing assets.

Simply put, you can imagine a pool with both water and water. Effluent represents depreciation. If the water level of the pool remains unchanged, the inflow can be regarded as maintenance capital expenditure. If the water level rises, the additional inflow is the growth capital expenditure.

The influence of capital expenditure and depreciation on enterprise cash flow: at first, because capital expenditure consumes a lot of money, cash flow will be lower than net profit; With the operation of enterprises, cash flow will be higher than net profit because of the depreciation of non-cash expenses.