• Starting up a business 🚀
• Running day-to-day operations ⏰
• Planning for future growth 🌳

💭 Think of a business like a car. It needs fuel to start, run, and also some savings to get repairs or upgrades in the future.
 

Finance can play two big roles

• Capital Expenditure (CapEx)
• Revenue Expenditure (RevEx)

• Definition: Money spent on items lasting for more than a year. It's like the big stuff you don't buy every day.

• Examples

  • Machinery 🏭
  • Land 🌄
  • Buildings 🏢
  • Vehicles 🚚
  • Equipment 🖨

• Purpose: These are for the long-haul! They help a business generate income over many years.

• Cool Fact: Businesses can use CapEx items as collateral (kinda like when you promise to give your video game to your friend if you don't return their book). For example, a bank might give a loan because a business offers its building as security.

💡 Real-world example: A pizza delivery service buying a new delivery van. They'll use it for years to deliver yummy pizzas to homes! 🍕

• Definition: The day-to-day spending needed to keep the business running. Think of it like buying groceries for your home.

• Examples

  • Rent 🏢
  • Salaries 💵
  • Raw materials 🌾
  • Insurance 📃
  • Fuel ⛽

• Purpose: Unlike CapEx, RevEx doesn't look at the long-term. It's more about keeping the lights on today!

💡 Real-world example: A school spending its funds on teacher salaries and cafeteria food. But hey, if they keep spending and never save, they won't have enough to build a new sports hall or fancy computer lab!