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What Are Operating Expenses?

By Kristi Waterworth – Updated Jun 11, 2025 at 12:33 PM EST

Key Points

Operating expenses are essential for day-to-day business functions, like customer service.
Capex refers to long-term investment costs, contrasting with yearly-deducted operating costs.
Evaluating a company's operating expenses helps investors gauge financial efficiency.

There are plenty of metrics to look at when choosing a new investment, especially stocks. Operating expenses should be part of your first glance since so much flows from how money is spent in a company. Read on to better understand what operating expenses are, what they aren't, and what they can tell you.

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A man in a factory works on new capital purchases. — Image source: Getty Images.

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Stock

A stock represents an ownership interest in a business. When a business wants to raise money, its board of directors determines the number of shares to issue.

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About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

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