The statistical aggregate of GFCF is a measure of the net new investment by enterprises in the domestic economy in fixed capital assets.

While it is not possible to measure the value of the total fixed capital stock very accurately, it is possible to obtain a fairly reliable measure of the trend in new fixed investment.

Usually statistics departments provide quarterly and annual data on GFCF, which function as economic indicators of the level of business activity.

Often detailed breakdowns are available on request for GFCF, by type of asset and economic sector (for example, residential buildings versus non-residential buildings, or government sector versus private sector).

Obviously though, GFCF is not a measure of total investment, because all kinds of financial assets are excluded. If, for example, one examines a company balance sheet, it is easy to see that fixed assets are only one component of the total annual capital outlay.

GFCF is a flow value. It is usually defined as the total value of additions to fixed assets by resident producer enterprises, less disposals of fixed assets during the quarter or year, plus additions to the value of non-produced assets (such as discoveries of mineral deposits, or land improvements).

Normally these assets are tangible assets, but in some cases they are intangible intellectual property including artwork and software. The debate continues about the exact definitional boundaries. The main asset types are plant & machinery, equipment, vehicles, land-improvements and buildings.

Some important assets are typically excluded from the official measure of GFCF. These include armaments and military installations, the value of repair work, the value of standing timber, farm animals, and durable household equipment.

Detailed standard definitions of GFCF are provided by the United Nations System of National Accounts (UNSNA) and the IMF Balance of Payments system. The definitions used by the US Bureau for Economic Analysis for the National Income & Product Accounts (NIPA's) are very similar.

GFCF is called "gross" because the measure does not make any adjustments for the depreciation of assets. In some ways, this terminology is confusing, because, in substance, the aim is to measure the value of the net additions to the fixed capital stock. In other words, it is the net capital formation that is of interest. Accidental damage and destruction are disregarded in the valuation, but tax levies and acquisition fees are included in GFCF. So it is the "all-up" costs of fixed investment that are being measured.

It is sometimes difficult to draw an exact statistical boundary between GFCF and intermediate consumption, insofar as the expenditure concerns alterations to fixed assets owned. In some cases, this expenditure can refer to new fixed investment, in others only to operating costs relating to the maintenance or repair of fixed assets.