How is CapEx characterized in terms of cash on the cash flow statement?

Capital Expenditures (CapEx) are investments in long-term assets such as property, plant, and equipment. In the context of a cash flow statement, CapEx represents a cash outflow because these expenditures are necessary for maintaining or expanding the operational capacity of a business. When a company spends cash to acquire or enhance its physical assets, that transaction decreases the amount of cash available to the company. Thus, CapEx is classified as a use of cash in the cash flow statement. This categorization is crucial for analysts and investors as it reflects the company's investment strategy and its potential future growth. Understanding this helps in analyzing cash flow from investing activities, which is vital for assessing the financial health and operational efficiency of a business.