What are capital expenditures primarily used for?

Capital expenditures are primarily used for acquiring, improving, or maintaining physical assets, such as property, buildings, machinery, and equipment. These expenditures represent a company's investments in long-term assets that will generate economic benefits over time. By improving or expanding their physical assets, businesses can increase capacity, enhance efficiency, and ultimately drive growth.

This type of spending contrasts with operating expenses, which cover day-to-day costs of running a business. Capital expenditures are significant as they usually require substantial financial commitment and are a key factor in strategic business planning. The implications of capital expenditures can affect a company's cash flow and financial health, making their proper management crucial for long-term success.