CapEx vs D&A
CapEx (Capital Expenditure) and D&A (Depreciation & Amortization) both come up in business conversations and get confused. Here's the plain-English difference, side by side, so you can use each one with confidence.
The key difference: CapEx refers to capital expenditure, while D&A refers to depreciation & amortization — they describe different things even when they show up in the same sentence.
CapEx — Capital Expenditure
Money spent acquiring or upgrading long-lived assets — buildings, equipment, software platforms. CapEx hits the balance sheet first and the P&L slowly through depreciation.
D&A — Depreciation & Amortization
Non-cash expenses that spread the cost of tangible (depreciation) and intangible (amortization) assets over their useful lives. D&A is the gap between accounting profit and cash flow.
When to use CapEx
Reach for "CapEx" when the conversation is specifically about capital expenditure. Money spent acquiring or upgrading long-lived assets — buildings, equipment, software platforms. CapEx hits the balance sheet first and the P&L slowly through depreciation.
When to use D&A
Reach for "D&A" when the conversation is specifically about depreciation & amortization. Non-cash expenses that spread the cost of tangible (depreciation) and intangible (amortization) assets over their useful lives. D&A is the gap between accounting profit and cash flow.
FAQs
What is the difference between CapEx and D&A?
CapEx stands for Capital Expenditure — Money spent acquiring or upgrading long-lived assets — buildings, equipment, software platforms. CapEx hits the balance sheet first and the P&L slowly through depreciation. D&A stands for Depreciation & Amortization — Non-cash expenses that spread the cost of tangible (depreciation) and intangible (amortization) assets over their useful lives. D&A is the gap between accounting profit and cash flow.
Are CapEx and D&A the same thing?
No. They're often used in the same conversation because they're related, but they describe different concepts. CapEx = Capital Expenditure. D&A = Depreciation & Amortization.
When should I use CapEx vs D&A?
Use CapEx when you're specifically referring to capital expenditure. Use D&A when the topic is depreciation & amortization.