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Capital expenditure, explained
Cash spent on a long-lived asset is not the same event as an expense. The cash leaves now. Profit records the cost as the asset is used.
8 min · 8 Sep 2026
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Explainers
Concepts that stay useful after the headline is gone. Events point here. These pages point back.
- DepreciationDepreciation allocates a cost the firm has already incurred. It is not a cash payment, and it is not an appraisal of what the asset would sell for.6 min
- Free cash flowFree cash flow is cash the business produces after the reinvestment required to maintain it. It is an analytical idea. It is not a single audited line.7 min
- Enterprise valueMarket capitalization is the price of the shares. Enterprise value is a way of stating the price of the whole firm, once debt and surplus cash are in the picture.7 min
- DilutionDilution is a change in the share of the firm each owner holds. Whether owners lose value depends on what was received for the new shares.7 min