What is role of OPEX in business management

Operating expenditure is more important to increase or decrease profitability of an organization Ability to control on maintenance cost and overhead expenditure considered as extra ordinary quality of a good business manager which cannot gain without vast experience of different positions.
Customer satisfaction is more important but caring OPEX makes a man competent

All expenses required for the day-to-day running of the business, e.g. salary/ wages, utilities such as telephone, insurance, property management, property taxes, travel and vehicle expenses, leasing commissions, raw materials, repairs and maintenance are covered under the category of Opex or Operational expenditure.

Opex is the amount the organisation spends to turn inventory (raw/ finished product) into final product. Operating expenses also include depreciation of assets e.g. plants & machinery and other assets which are used in the production process/ sales process including interiors in a showroom etc.

Profit is the bottom line and is the motive for running a business. Gross Margins less expenses are determine the amount of profit generated by any business, but Opex requires constant attention and monitoring.

Any increase in expenses results in a decrease in profits. Profit generated after deducting COGS is known as gross profit. Profit generated after deducting operating expenses is referred to as operating profit or profit before interest and taxes. Profit earned after deducting taxes and interest is called net profit.

 

The amount of increase or decrease in total operating expenses will result in a similar change in the amount of profits. Business profits can increase once our processes are efficient and we are able to maximize operational efficiency.