Capex vs Opex

Capex buys assets that last beyond a year and is spread across the income statement through depreciation; opex hits profit immediately. Where the line falls is a judgement with real consequences: capitalising costs that should be expensed inflates current profit and is a recurring feature of accounting scandals, WorldCom being the largest. Cash flow is unaffected by the choice, which is why cash-based analysis is harder to game.