Operating expenses, also known as Operating Expenses in English, often abbreviated as OpEx, refer to the company's costs and expenditures during daily operations, including sales, administrative management, research and development, rent, utilities and other expenses. Operating expenses differ from cost of goods sold (COGS) and capital expenditures (CapEx). Cost of sales refers to costs directly related to producing goods or providing services, including raw material costs, direct labor costs, depreciation of production equipment and other expenses directly related to production. Operating expenses are not directly related to the production process. Capital expenditures refer to long-term investments made by businesses to purchase, maintain or upgrade fixed assets (such as land, buildings, equipment, technology, etc.). Operating expenses usually refer to short-term expenses that can be incurred and settled within the current period or year. Sales and marketing expenses, also known as Sales and Marketing Expenses in English, are all costs and expenses incurred by a company in selling its products or services. These expenses are often directly related to a business's sales activities. Selling expenses often include the following aspects: Advertising and Marketing: Spending on advertising on television broadcasts, social media, magazines, and costs for marketing activities such as promotions, product demonstrations and trade show expenses. Sales staff compensation: including the sales team’s basic salary, commissions, bonuses and other compensation related to sales performance. Distribution and transportation expenses: refers to the cost of transporting products from the warehouse to the point of sale, including logistics, transportation, warehousing and distribution expenses. Customer service and after-sales service: including the cost of providing customer service, technical support, after-sales maintenance and guarantee. General and administrative expenses General and Administrative Expenses, often abbreviated as G&A, mainly include: Wages and Compensation: Includes salaries and benefits for managers and administrators. Office space rental: including office, warehouse, etc. rental costs. Utility expenses: water, electricity, heating and other expenses to maintain the normal operation of the office space. Insurance costs: including property insurance, liability insurance and employee insurance, etc. R&D expenses R&D expenses, known as Research and Development in English, often abbreviated as R&D, mainly include: R&D salary: Wages paid to employees engaged in research and development. Materials and Equipment Expenses: Costs spent on developing new products or improving existing products. Laboratory and testing expenses: Involves the expenses for experiments and testing required during the research and development process. How to find operating expenses from financial statements? Operating expenses can be found in the income statement of the financial report. The following is an example of Apple's (AAPL) income statement for September 2023, from which you can find two options: "Research and development", "Selling, general and administrative", and total marketing expenses. The data is summarized below: The meaning of the option values in the income statement (September 30, 2023) Research and development$29,915 million sales and marketing expenses Selling, general, and administrative $24,932 million selling, general and administrative expenses Total operating expenses$54,847 Million total operating expenses Operating Expenses vs. Cost of Sales Operating expenses and cost of sales are two important indicators in a company's financial statements. They are both costs that companies must consider in their operations, but their specific content and functions are different. Operating Expenses (OPEX)Cost of Goods Sold (COGS) Define the expenses incurred by the enterprise in daily operations, usually costs that are not directly related to product production but directly related to product production and sales.
Including administrative expenses, marketing expenses, office rent, depreciation, insurance and other raw materials, direct labor, direct expenses in the manufacturing process, etc. The occurrence time occurs continuously and is related to the operation scale and management style of the enterprise. It only occurs during the product manufacturing and sales process. Impact on Profit Affects operating profit, but does not directly affect gross profit Directly affects gross profit Management methods can be reduced by optimizing management and improving operational efficiency. It can be reduced by improving production processes and optimizing procurement. Financial statement location is usually listed after operating income in the income statement. Gross profit was previously listed after operating income in the income statement and is used to calculate gross profit. Examples: sales and marketing expenses, administrative salaries, R&D expenses, raw material expenses, factory worker wages, maintenance expenses for production equipment More investment guides What are Bollinger Bands and how do I use them? What is Moving Average (MA)? What is the Money Flow Index (MFI)? And How to use it? What is the Federal Reserve Balance Sheet? What are minority interests? How to handle the profits of subsidiaries? What is Shareholders’ Equity? Shareholders’ Equity What is the Price to Cash Ratio (P/CF)? How to calculate? What is Cost of Goods Sold (COGS)? How to calculate? What is a Company’s Preferred Stock?