Investing term

What is Operating expenses (OpEx)?

Costs of running the business that aren't directly tied to making the product — sales, marketing, R&D, general & admin.

Operating expenses (OpEx) are the costs of running a business that aren't part of directly making the product — sales, marketing, research and development, and general administration. Subtracting them from gross profit gives operating income. Watching OpEx as a share of revenue shows whether a company is scaling efficiently or letting overhead balloon as it grows.

For example

A company spends heavily on sales and R&D; if those operating expenses grow faster than revenue, profits get squeezed even as sales rise.

Operating expenses (OpEx) is taught hands-on in Stage 14 — Reading Financial Statements.

See the lesson →

Related terms

Accounts receivable (A/R)Money customers owe the company for goods or services already delivered but not yet paid.AccrualsAccounting entries that record revenue or expense before cash actually moves.Annual reportThe yearly disclosure that includes audited financials, MD&A, and footnotes — the primary source for serious investors.Balance sheetThe 'photo' statement — what the company owns, what it owes, and what's left for owners, on a single date.
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