What is “Operating Expenses (OPEX)” meaning?

Operating expenses (OPEX) refer to the ongoing costs that a company must pay to keep its business running. These expenses include things like rent, salaries, utilities, office supplies, and marketing costs. OPEX are necessary to maintain normal business functions but do not include capital expenditures or one-time costs associated with acquiring assets.

Example

“The company carefully tracked its operating expenses to ensure that its monthly budget remained on target, avoiding overspending in non-essential areas.”

How is “Operating Expenses (OPEX)” used in business?

In business, OPEX plays a critical role in profitability analysis. By tracking OPEX, companies can evaluate their efficiency, identify cost-saving opportunities, and calculate operating income. Managing these expenses effectively is essential for maintaining healthy cash flow and long-term sustainability.

Pro Tip

Regularly monitor operating expenses to identify areas for cost-cutting or efficiency improvements, especially in departments like marketing or administration.

Related Terms

Fixed Costs, Variable Costs, Capital Expenditure (CapEx), Cost of Goods Sold (COGS)