6.2 Capital Investment
When a business spends money on new non-current assets it is known as capital investment or capital expenditure and spending may be done for:
Spending to replace worn-out or obsolete assets or to improve safety and security of existing non-current assets
Spending to achieve cost savings, quality improvements and improvements to productivity, etc.
Spending to grow the business, make new products, open new outlets, invest in research and development
Spending which is necessary for the smooth running of the business but not directly related to operations e.g. renovating office building
Spending is normally irregular and for large amounts and is expected to generate long term benefits
Capital Investment
Capital investment is the expenditure of money to fund a company's long-term growth. The term often refers to a company's acquisition of permanent fixed assets such as real estate and equipment.