OPERATING LOSS Meaning and
Definition
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Operating loss is a financial term used to describe a negative result when a company's operating expenses outweigh its operating revenues over a specified period. It indicates that a business has incurred greater costs in its day-to-day operations than the income generated from its core activities.
Operating loss is often referred to as a loss from operations, operating deficit, or a negative operating profit. It reflects the performance of a company's primary operations, excluding taxes, interest, and extraordinary items. By subtracting total operating expenses from total operating revenues, the resulting figure represents the amount lost in the period.
Operating expenses include costs related to production, materials, labor, wages, salaries, rent, utilities, advertising, and depreciation of assets directly associated with producing goods or services. Operating revenues, on the other hand, encompass the sales of products or services, rental income, fees, and other operating income earned by the company.
An operating loss highlights the inefficiency or unprofitability of a company's core operations and indicates a need for strategic restructuring, cost-cutting measures, or changes in business plans. It can be a temporary setback or a chronic issue that requires management's attention to improve profitability. Investors and analysts carefully analyze operating losses to assess a company's financial health, evaluate management's actions, and predict future performance.
Common Misspellings for OPERATING LOSS
- iperating loss
- kperating loss
- lperating loss
- pperating loss
- 0perating loss
- 9perating loss
- ooerating loss
- olerating loss
- o-erating loss
- o0erating loss
- opwrating loss
- opsrating loss
- opdrating loss
- oprrating loss
- op4rating loss
- op3rating loss
- opeeating loss
- opedating loss
- opefating loss
- opetating loss
Etymology of OPERATING LOSS
The word "operating loss" is derived from two main components: "operating" and "loss".
The term "operating" is derived from the verb "operate", which comes from the Latin word "operari", meaning "to work" or "to carry on". In the context of business or finance, "operating" refers to the day-to-day activities and functions that a company undertakes to generate revenue and manage its operations.
The word "loss" originates from the Old English word "los", which refers to the destruction, deprivation, or damage of something. It can also imply a lack of gain or decline in value. In the financial context, a "loss" refers to a negative difference between expenses and revenue, indicating that a company's expenses exceed its income.
