Operating expenses; the day-to-day costs required to run a business, including salaries, rent, utilities, and supplies. These are ongoing costs necessary to maintain normal business operations, as opposed to capital investments.
Abbreviated from 'operating expenditures' in mid-20th century corporate finance as companies sought shorter terminology for frequent financial discussions. The acronym became standard business jargon by the 1980s alongside its counterpart 'capex.'
Opex vs capex decisions reveal a company's strategic thinking! Choosing to lease equipment (opex) instead of buying it (capex) might seem more expensive, but it preserves cash flow and keeps the balance sheet lighter—which investors often prefer in growth companies.
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