What Is an Operating Loss?

Operating losses are a symmetry of "policy losses". That is, the loss caused by the poor production or management of the enterprise. The operating loss of the enterprise was mainly caused by subjective factors. A small number of enterprises may also suffer losses due to objective factors such as the increase in raw material purchase prices, labor services, and transportation costs, while the sales price of goods cannot be changed accordingly. Enterprises with operating losses should fully mobilize the masses, conduct inspection and analysis, find out the reasons for the losses, reform the operating mechanism, improve operating management, implement an economic contracting responsibility system, and turn losses into profits within a time limit. For operating losses within the period of turning around losses, the financial department shall properly approve the loss subsidy. Financial subsidies beyond the deadline will no longer be subsidized. Enterprises that have suffered serious losses due to poor management and are unable to settle their due debts may declare bankruptcy in accordance with the provisions of the "Bankruptcy Law of the People's Republic of China. ^[1]