What is capital expenditure (CapEx) primarily used for?

Capital expenditure (CapEx) is primarily associated with acquiring, upgrading, or maintaining fixed assets such as property, buildings, machinery, and equipment. These expenditures are crucial for a company’s operations and growth, as they represent long-term investments that will benefit the company over several years. When a business invests in CapEx, it is typically to enhance its productive capacity, improve efficiency, or extend the useful life of its existing assets.

The other choices pertain to different aspects of financial management. Paying off debts involves financing decisions and affects a company’s capital structure, but it does not relate to acquiring or maintaining fixed assets. Investing in financial securities focuses on market activities, which do not directly contribute to the acquisition of physical assets. Distributing dividends to shareholders represents a return on investment but does not involve the funding of assets necessary for operations and growth like CapEx does. Hence, the focus on acquiring and maintaining fixed assets aligns directly with the definition and purpose of capital expenditures.