Reading the accounts
Operating expenses
Also called Opex or SG&A
The costs of running the business that are not tied directly to producing each unit sold.
How it works
Research and development, sales and marketing, and general and administrative costs make up most of it. These are the costs management has the most discretion over in the short term.
That discretion is why operating expenses are worth watching as a percentage of revenue: it shows whether growth is bringing operating leverage or simply requiring more spending.
Related terms
- Operating incomeProfit from the core business, before interest and tax.
- Operating leverageHow much profits amplify revenue changes, because some costs stay fixed as sales move.
- Cost of goods soldThe direct costs of producing the goods or services a company sold.
- Income statementThe statement showing revenue, costs and profit over a period.
Mentioned in
More in Reading the accounts
- Operating cash flow
- Off-balance-sheet
- Operating margin
- Net margin
- Organic growth
- Net income
- Owner earnings
- Net debt / EBITDA
All 51 Reading the accounts terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.