How to Find Capital Expenditures on Financial Statements

Companies invest in their future by acquiring or improving long-term assets, which are known as capital expenditures. These investments are crucial for a business to maintain its operations, expand its capacity, or develop new products and services. Understanding a company’s capital expenditures provides insights into its strategic direction and its commitment to growth.

Defining Capital Expenditures

Capital expenditures, often abbreviated as CapEx, represent funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment. These investments are distinct from routine operating expenses, which cover day-to-day costs like salaries or utility bills. A key characteristic of CapEx is that the acquired asset is expected to provide economic benefits for more than one accounting period, typically several years. For instance, a manufacturing company purchasing a new, high-efficiency machine or a retail chain building a new store location are both examples of capital expenditures.

Accessing Company Financial Information

To find information about a company’s financial activities, including its capital expenditures, the first step involves accessing its official financial reports. For publicly traded companies, these documents are readily available through their investor relations websites. Most companies maintain a dedicated “Investor Relations” section, where financial reports, press releases, and SEC filings are typically posted for public review. Within this section, one can usually find links to “Financial Reports” or a direct portal to “SEC Filings.”

Another reliable and comprehensive resource is the U.S. Securities and Exchange Commission’s (SEC) EDGAR database. EDGAR provides free access to corporate information filed with the SEC. To find the most relevant financial statements, individuals should look for the annual report, known as Form 10-K, and quarterly reports, known as Form 10-Q.

Identifying Capital Expenditures on the Cash Flow Statement

The most direct method for identifying capital expenditures involves examining a company’s cash flow statement. This financial statement is organized into three main sections: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities.

Capital expenditures are specifically found within the “Investing Activities” section of the cash flow statement. This section details the cash used for or generated from the purchase or sale of long-term assets. When a company makes a capital expenditure, it represents a cash outflow, which is typically presented as a negative number on the statement, indicating cash spent.

Common line item descriptions for capital expenditures include “Purchases of property, plant, and equipment,” “Capital expenditures,” “Additions to fixed assets,” or “Cash paid for property, plant, and equipment.” The cash flow statement is considered the most reliable source for CapEx because it directly reports the actual cash spent by the company on these long-term investments during a specific period, providing a clear and straightforward figure.

Supplementing Your Search with Other Statements

While the cash flow statement offers the most direct view of capital expenditures, other financial statements and their accompanying notes can provide additional context and supplementary information.

The balance sheet, for instance, presents a company’s assets, liabilities, and equity at a specific point in time. The Property, Plant, and Equipment (PPE) line item on the balance sheet reflects the accumulated value of a company’s long-term tangible assets, net of depreciation. An increase in the PPE balance from one period to the next often suggests that capital expenditures have occurred, though this figure represents book value rather than the actual cash outflow.

The notes to financial statements, which accompany the main financial statements, are a crucial resource for deeper insight. These notes provide detailed disclosures that explain the accounting policies, assumptions, and specific breakdowns of various accounts, including capital expenditures. Companies often disclose future capital expenditure commitments, major asset acquisitions, or detailed schedules of their PPE in these notes, offering a more comprehensive understanding of their investment strategies.

Lastly, the income statement, which reports a company’s revenues and expenses over a period, includes depreciation and amortization expenses. These expenses are related to the wearing out or consumption of capital assets over time, but it is important to note that the income statement does not show the actual cash spent on capital expenditures.