Stock Investing For Dummy – What Are Operating Expenses, Operating Income And Operating Margin?
All three of these terms have to do with the overall health of a companys operations and the ability for it to continue as an ongoing firm. These figures are best studied over a period of time against competing firms within the market sector of the particular firm.
Operating expenses are part of the overhead costs attached to selling products on the market. They are not necessarily directly connected to the cost of the specific product being sold but must be included when figuring the operating expenses of a company. These include fixed costs of salaried employees (administration, sales, etc.) and variable costs (labor, research and development, etc.). Operating expenses are found on the income statement.
Operating income determines a companys earning power from ongoing operations. This is the figure equal to earnings before deduction of interest payments and taxes. This is another figure commonly found on the income statement. This figure is also commonly referred to as operating profit or earnings before income and taxes (EBIT). Operating income is a...
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