Operating Expenses include the expenses that are required to run the day to day operations of the business.  

It is calculated as follows: Operating Expenses / Sales Revenue * 100.

They include expenses such as:
-    Repairs and maintenance
-    Advertising costs
-    Insurance costs
-    Accounting Fees
-    Rent
-    Travel and Accommodation
-    Telecommunication Expenses
-    Light and Power Expenses
-    Rates and Taxes

It excludes expenses related to Cost of Goods Sold (COGS) and Cost of Sales (COS) as these are directly related to sales and do not form part of the overheads of the business.

Typically, the expenses included in the Operating Expenses Ratio are more fixed than variable, therefore should not change at the same rate as the COGS and COS do as your sales increase or decrease.

If you would like to discuss further please contact us:
McNamara and Co - Chartered Accountants, located minutes from the Melbourne CBD
www.mcnamaraandcompany.com.au/contact-us
Phone +61 3 9428 1062
Email admin@mcnamaraandco.com

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