Operating Expenses
Definition:
Operating expenses are the expenses that a company incurs in order to generate its operating revenue. They are typically divided into three categories:
Cost of goods sold (COGS): COGS is the cost of the products or services that a company sells.
Selling, general, and administrative (SG&A) expenses: SG&A expenses are the expenses that a company incurs in order to sell its products or services and to manage its operations.
Depreciation and amortization (D&A): D&A are non-cash expenses that are used to account for the wear and tear of a company's assets.
Example:
Here are some examples of operating expenses:
Cost of goods sold: This includes the cost of raw materials, labor, and overhead.
Selling, general, and administrative expenses: This includes marketing, sales, administrative, and general expenses.
Depreciation and amortization: This includes the cost of depreciating and amortizing fixed assets.