what is the largest downside to a capital investment 
companies must often make a long term financial or legal commitment when buying capital investments this means tying up cash getting rid of flexibility and taking a risk that may not pan out whereas a company can be more nimble by paying for something smaller a company aims to leverage a single investment to scale growth or innovate that growth or innovation may not materialize the bottom linecompanies may decide to make capital investments as a way to innovate modernize and capture a competitive advantage over its competitors this investment often requires a large sum of money and the company often receives an illiquid asset such as land buildings machinery or equipment the accounting treatment for capital investments if often different than operating outlays as capital investments are usually depreciated 