![]() ![]() ![]() Operating profit margin = operating income / revenue Gross profit margin = gross profit / revenue Profit margin is then calculated as follows: Net income = operating income - interest - taxes Operating income = gross profit - OPEX - depreciation - amortization Opex is used to calculate operating income, which is then used to calculate net income - or the bottom line - as shown in the following formulas: Opex excludes the cost of goods sold (COGS), which are costs directly attributable to the production and sales of specific goods and services, including raw materials and components. Opex includes selling, general and administrative expense, which are costs incurred through the main business activities, or overhead. Businesses might also pay for cloud computing services and car leasing out of Opex. Depending on the industry, these expenses can range from the ink used to print documents to the wages employees are paid. These expenses can be one-time or recurring. Opex (operational expenditure) is the money a company or organization spends on an ongoing, day-to-day basis to run its business. Pat Brans, Pat Brans Associates/Grenoble Ecole de Management. ![]()
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