Operating Expenses: The costs associated with running a business, including wages, rent, supplies, and utilities.
Operating expenses are the ongoing costs that a company incurs as part of its day-to-day operations. These expenses are necessary for a company to operate, but they do not directly contribute to the production of goods or services that generate revenue. Operating expenses are typically reported on a company's income statement, which is one of the primary financial statements used to analyze a company's financial performance.
Examples of operating expenses include:
Operating expenses are an important component of a company's financial performance, as they represent the ongoing costs of running the business. By carefully managing their operating expenses, companies can improve their profitability and generate more value for their shareholders. This may involve implementing cost-cutting measures, improving efficiency, or finding ways to increase revenue and reduce expenses. Overall, operating expenses are a critical aspect of a company's financial health and must be carefully managed to ensure long-term success.