OPEX

Opex

See: Operating Expenses

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Operating Expenses

A company's expenses related to the production of its goods and services. Examples of operating expenses include wages for employees, research and development, and costs of raw materials. Operating expenses do not include taxes, debt service, or other expenses inherent to the operation of a business but unrelated to production. See also: Operating income.

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Operating Expense

What Does Operating Expense Mean?

An expenditure that a business incurs as a result of normal business operations; a challenge faced by a company's management is to determine how much operating expenses can be reduced without significantly affecting the firm's ability to compete with its competitors. Also known as OPEX.

Investopedia explains Operating Expense

As an example, the payment of employee wages and the allocation of funds for research and development are operating expenses. In the absence of raising prices or finding new markets or product channels to increase sales and raise profits, some businesses attempt to increase the bottom line solely by cutting expenses. Although laying off employees and reducing product quality initially can boost earnings and may even be necessary when a company has lost its competitiveness, operating expenses can be cut only so much before the quality of business operations is damaged.

Related Terms:
• Expense Ratio
• Operating Cash Flow—OCF
• Operating Income
• Operating Margin
• Operating Profit