Definition: An operating expense (often abbreviated as OPEX) refers to the costs that a business incurs during its normal operations. These expenses are necessary for the business to function but do not include costs like depreciation (the reduction in value of an asset) or financing costs (like loans) and income taxes. Examples of operating expenses include rent, utilities (like electricity and water), salaries of employees, and insurance.
In more advanced contexts, operating expenses are analyzed to determine how efficiently a company is running. Businesses often aim to reduce operating expenses to improve profitability.
While "operating expense" has a specific meaning in business, the words "operating" and "expense" can be used separately in different contexts: - Operating: Can refer to how something is functioning, such as "operating system" in computers. - Expense: Generally refers to any cost or expenditure, not limited to business (e.g., personal expenses).
While there aren’t specific idioms or phrasal verbs that directly relate to "operating expense," here are a couple that may be useful in a business context: - Cut costs: To reduce expenses. - Example: "We need to cut costs to improve our profit margins." - Balance the books: To ensure that all financial accounts are correct and balanced.