TERVIAGRUPO EMPRESARIAL
TERVIA Capital

Where a company's money goes.

TERVIA Capital is the group's finance arm: it manages capital, investments and financing for the TERVIA companies. Here is a basic guide to reading any business's expenses.

Informational guide

Four types of expense, four different questions.

OpExOperating expense

“The cost of running the operation.”

What it is
Recurring day-to-day costs, fully expensed in the period.
In the financial statements
Hit the income statement directly and reduce profit for the period. They create no asset.
When to review it
Monthly, against budget and as a percentage of sales.
Examples
Rent, salaries, utilities, minor maintenance, software subscriptions.
Common mistake
Mixing it with capital expenditure or not reviewing recurring costs.
CapExCapital expenditure

“The cost of building capacity.”

What it is
Purchases of assets that deliver value for more than a year.
In the financial statements
Recorded as assets on the balance sheet and depreciated or amortized over time.
When to review it
When planning growth, buying equipment or expanding facilities.
Examples
Machinery, barns and pens, vehicles, tanks, in-house software development.
Common mistake
Underestimating total cost and the maintenance that comes after.
RevExRevenue-linked expense

“The cost of selling.”

What it is
Direct costs to generate revenue and deliver the product or service.
In the financial statements
Affect gross profit and move with sales volume.
When to review it
When setting prices and analyzing each product's margin.
Examples
Cost of goods sold, sales commissions, freight and delivery, card processing.
Common mistake
Ignoring hidden costs or assigning them to the wrong product.
FinExFinancial expense

“The cost of money.”

What it is
Costs of financing the company and managing its capital structure.
In the financial statements
Reduce net profit and weigh on leverage ratios.
When to review it
When taking on or refinancing debt and planning cash flow.
Examples
Interest, bank fees, foreign-exchange costs, cost of raising capital.
Common mistake
Borrowing too early or looking only at the rate instead of total cost.

General content for informational purposes only. It is not investment advice or a personalized recommendation; the tax and accounting treatment of each expense depends on applicable rules and on each company. See regulatory notices →