OPEX
Operating Expenses
Short definition
OPEX is the accrued and cash cost taken after gross profit to reach operating profit: selling, G&A, R&D and, depending on presentation, depreciation. It is separate from COGS.
Detailed explanation
Fixed opex does not scale; variable opex moves with volume or sales. That split is the spine of break-even and cash-burn analysis. Capitalised development understates opex and overstates capex; the cash outlay is the same.
Inflation lifts opex with a lag. Outsourcing and leasing move the COGS–opex–finance boundary. One-off litigation, severance and FX should not sit in run-rate opex.
Why it matters for the CFO
The pricing floor is gross margin; cash flexibility is how much opex can actually be cut. In a high-rate regime rigid opex collides with debt service; “cost-out” is not destocking or skipped maintenance.
How to read it
A falling opex/sales ratio can be productivity or deferral; deferred maintenance returns as opex and capex later. Wage indexation quietly eats margin.
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Definitions are educational. They are not investment, credit or tax advice.