What it is
Capex is investment in assets the company expects to use for multiple years. Two flavours:
- Maintenance capex — keeps the existing business running (replacing worn machines).
- Growth capex — expands capacity (new factories, new product lines).
Why it matters
Capex is the bridge between OCF and FCF. A business with high capex needs converts less of its operating cash into truly free cash. Asset-light businesses (software, services) typically have very low capex and high FCF conversion.
Companies report total capex on the cash flow statement; the maintenance / growth split is usually disclosed in commentary or estimated by analysts.