Operating Expenses

What Are Operating Expenses?

Operating expenses are expenses incurred in operating the business.

How it Works

A trading company makes income from gross profit.

That is, they buy goods.

Then they mark those goods up and sell them to customers.

The difference between the two is gross profit or gross margin.

To  operate the business, the business will need to pay for operating expenses.

These include expenses such as advertising, payroll, rent, marketing, utilities, and insurance.

The difference between gross profit and operating expenses is known as income from operations.

© R.J. Hickman 2020