What are the operating costs?

Operating expenditure is a term often used in the business world. Refers to the ongoing costs necessary for business. In other words, operating costs are the cost of what is happening behind the scenes. This includes all costs related to the actual operation of the company.

Sometimes the term operating costs are shortened as OPEX, especially in internal documents or communication on the company's earnings. The most common operating costs are salaries and benefits of employees, which are often the largest only expenditure for the company. Other items that can be included in the list of expenses are advertising and marketing costs, office supplies, legal and license fees, office services and accounting fees, costs of research and development and raw materials. When an asset, such as a vehicle or piece of equipment, becomes less than its original purchase, the accountant can deduct a new, smaller value from the initial value and calculate what is left as depreciation. This becomes operating costs if lay downThey still use in operations.

One -time costs related to the company are usually considered to be capital expenditure (CAPEX). This includes expenditures such as buying new equipment when old equipment is fully depreciated. The main reason for the OPEX and CAPEX costs is that it provides companies and investors a more detailed picture of where the money is spent before they can be changed to profit. If a self -employed person can consider both Opex and Capex as business expenses.

All publicly traded companies and non -profit organizations must include information on operating expenditure in their annual reports. Such information is usually illustrated by the financial graphs of ThPři comparison of operating costs for the current calendar year with previous years. This can help give readers a clear picture of expenditure over time.

The easiest way to see this informationAt hand, to publish these messages, it is constantly monitoring operating costs throughout the year, either by accounting or using financial management software. If the expenses from year to year differ considerably - especially if the expenses - the parties involved will want explanations. Having detailed records can help determine the reasons why there are trends to determine the explanation and solution of rising costs. The offer of such explanations and finding solutions is often the task of the company treasurer.