Economy

What is operational expenses? »Its definition and meaning

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Operational expenses are those outflows of money or economic expenses of a company, generated by the administrative needs of the same. These expenses can be directed to different activities and needs, such as the payment of salaries to the staff and the acquisition of relevant materials for the operation of the establishment. In contrast to these, there are non-operating expenses, generated by interest on borrowed money, as well as other unusual expenses, such as the reorganization of companies, facing legal proceedings, among others. It should be noted that operating expenses are derived from the general operation, that is, they are not entirely related to production.

These outlets are usually subdivided into two other categories, depending on where the expense is directed, being as follows: administrative expenses, here, the company's administrative needs are met, such as payment to senior executives, labor relations personnel, hiring and accounting, in addition to the purchase of office supplies, such as sheets of paper, pens, among others; general expenses, which include fiscal and financial expenses, whose main characteristic is that they must always be paid, regardless of whether the company is in a low or high production period.

In each company, to measure its performance, it is necessary to keep an income statement. In this document, both operating and non-operating expenses are specified; Thus, the gross profit can be appreciated and, subtracting the final sum of the operating expenses, it can show us the operating profit. After a series of operations with non-operating expenses, the net profit of the business can be obtained.