Business Operating Cost & Cashflow – How To Manage Business Operating Capital
Operating expenses are those costs every business has that are not considered directly related to a companys first line of business. Operating costs include sales and marketing, research and development (R&D), administrative costs and other costs which does not involve directly in the business
Investors want to make sure management is doing the best job it can to keep these costs in control as well as maintaining their bottom line. Operating expenses are available on the financial statements that every publicly traded company files with the SEC.
Management also must do a good job turning a profit with its own operations. That means the costs associated with cost of goods sold (COGS), etc. must generate more than those costs. If not, well, the company must be in the wrong line of business. Companies should never be operating at a loss. If a company is operating at a loss exactly why needs to be interpreted by the prospective investor
Operating margins represent the direct relationship between sales revenue and operating income. The operating margin of a firm...
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