Definition

Noun: - The ongoing costs for running a business or maintaining an asset: This refers to the regular, day-to-day expenses incurred during normal business operations to keep a property or enterprise functioning. It specifically excludes certain major financial costs like depreciation, financing interest, and income taxes.

Usage

This term is used primarily in accounting, finance, and business contexts to categorize and analyze the costs directly associated with core operations. - Operating expense is a key line item on an income statement. - Companies aim to reduce their operating expenses to improve profitability. - When budgeting, managers forecast operating expenses for the next quarter.

Examples

• Noun:
  • Rent and salaries are typically considered part of a company's operating expense.
  • The building's operating expense includes electricity, water, and security services.
  • A high operating expense ratio can indicate inefficiency in managing day-to-day costs.

Advanced Usage

• "Above-the-line expense": In some contexts, operating expenses are referred to as above-the-line costs, meaning they are deducted from revenue to calculate operating income.
  • Marketing and research are treated as above-the-line operating expenses.

Variants and Related Words

• OpEx: A common abbreviation used in corporate finance and accounting.
  • The CFO is focused on cutting OpEx this fiscal year.
• Operating Cost: A very close synonym, often used interchangeably.
• Selling, General and Administrative Expenses (SG&A): A major category that falls under operating expenses, covering costs not directly tied to production.

Synonyms

• Running cost: Emphasizes the continuous nature of the expense.
• Overhead: Often refers to indirect operating expenses like administration, utilities, and rent.
• Operating expenditure: A formal equivalent term.

Related Phrases

• "To cover operating expenses": To generate enough revenue to pay for the ongoing costs of running the business.
  • The new sales must at least cover our monthly operating expenses.
• "Fixed vs. Variable operating expenses": Categorizing costs based on whether they change with production volume (variable, like raw materials) or remain constant (fixed, like rent).
  • Analyzing fixed and variable operating expenses helps in financial planning.

Noun

1. 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