Operating Ratio

Finance allah shmoop what are operating expenses Well simply put

operating expenses are the expenses it takes to operate a

business Yeah in sort of big fat dog here but

why would they be called out separate from any other

expenses You know manish thana like what other expenses are

there anyway that aren't operating All right Well we'll noodle

the notion here for a moment Noodling noodling Well if

you are running a drone making plant while your operating

expenses are things like the cost of plastic molds for

the drone itself batteries computer chips for the brains of

the drone computer chips to communicate wirelessly with the controller

copter blades lights packing material labour to put all this

together and then they're shipping containers Don't forget shipping containers

The drones don't just fly to the customer way need

pretty ribbons on them anyway Never mind on that part

so all of the above our core operating expenses they're

part of what comprises the gross profits of the company

The revenue minus the cost actually make the product but

to fully operate the business you need to include a

ton of other things like paying for insurance rent for

ah building You need lawyers because they always need lawyers

and and there's secretaries and other bureaucrats Teo you know

do stuff run things Yeah well added up those operating

expenses when subtracted from revenues while they give you operating

profits or crete acts profits And there are other expenses

like capital expenses That is you spend one hundred million

box on a factory teo stamp out drones or whatever

And that cash is spent immediately upfront but factory last

twenty years So well you know what do you do

Well yeah You take five million a year to straight

lined appreciate factory too Zero after it's used up Well

you might also have acquired patents which are similarly written

down in value or advertised away as their value slowly

fades with time like shmoop writers So what's left Well

what comes after operating profits Well taxes on dividends and

a bunch of other crap like you know if the

company had invested in things that had to be written

up or down and other branham stuff it's all out

there after operating expenses But a key idea here is

that operating expenses are more or less Quote everything unquote

That it takes to run the business except taxes in

dividend obligations which aren't counted in this calculation So now

that you have a handle on what comprises operating expenses

well you too can be a no smooth operator Shod

a member Ask your parents in oh no she's a 00:02:53.33 --> [endTime] smooth operator