Operating Expense

Operating Expense
A category of expenditure that a business incurs as a result of performing its normal business operations. One of the typical responsibilities that management must contend with is determining how low operating expenses can be reduced without significantly affecting the firm's ability to compete with its competitors.

Also known as "OPEX".

For example, the payment of employees' wages and funds allocated toward research and development are operating expenses. In the absence of raising prices or finding new markets or product channels in order to raise profits, some businesses attempt to increase the bottom line purely by cutting expenses.

While laying off employees and reducing product quality can initially boost earnings and may even be necessary in cases where a company has lost its competitiveness, there are only so many operating expenses that management can cut before the quality of business operations is damaged.


Investment dictionary. . 2012.

Игры ⚽ Поможем решить контрольную работу

Look at other dictionaries:

  • Operating expense — Accountancy Key concepts Accountant · Accounting period · Bookkeeping · Cash and accrual basis · Cash flow management · Chart of accounts  …   Wikipedia

  • operating expense — all the expenses normally incurred in running a business, during an accounting period, excluding the cost of goods sold. Glossary of Business Terms * * * operating expense operating expense ➔ expense * * * operating expense UK US noun ACCOUNTING… …   Financial and business terms

  • Operating Expense Ratio - OER — A measure of what it costs to operate a piece of property compared to the income that the property brings in. The operating expense ratio is calculated by dividing a property s operating expense by its gross operating income. Investors using the… …   Investment dictionary

  • operating expense ratio — A ratio used in real estate lending analysis. The ratio is the total operating expenses divided by the effective gross income. American Banker Glossary * * * operating expense ratio UK US noun [S] ACCOUNTING ► the relationship between operating… …   Financial and business terms

  • operating expense — noun the expense of maintaining property (e.g., paying property taxes and utilities and insurance); it does not include depreciation or the cost of financing or income taxes • Syn: ↑operating cost, ↑overhead, ↑budget items • Topics: ↑tax,… …   Useful english dictionary

  • operating expense — noun a) Any expense incurred in running a business, such as sales and administration, as opposed to production. b) The money an entity spends in order to turn inventory into throughput. Syn: OPEX …   Wiktionary

  • expense — ex‧pense [ɪkˈspens] noun 1. [countable, uncountable] ACCOUNTING an amount of money that a business or organization has to spend on something: • Most advertisers look upon advertising as an expense and not an investment, which is a mistake. • The… …   Financial and business terms

  • expense — ex·pense 1 n: financial burden or outlay; specif: an item of business outlay chargeable against revenue for a specific period busi·ness expense: an expense made in furtherance of one s business esp. as part of the cost of operating a business in… …   Law dictionary

  • Non-Operating Expense — An expense incurred by activities not relating to the core operations of the business. Accountants may remove non operating expenses or revenues in order to examine the performance of the business, ignoring effects of financing or irrelevant… …   Investment dictionary

  • operating cost — ➔ cost1 * * * operating cost UK US noun [C, usually plural] ACCOUNTING ► (also operating expense) a cost relating to producing a company s goods or services: cut/increase/reduce operating costs »The company plans to cut operating costs by £1.2bn… …   Financial and business terms

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”