Other Operating Expenses
Miscellaneous Costs Directly Tied to Core Business Operations
Other Operating Expenses is a catch-all category in the income statement for recurring expenses that are essential to running the core business but do not fit neatly into major line items like cost of revenue, selling/general/administrative, or research & development. These expenses are typically operational in nature and include items such as utilities, office supplies, travel, insurance (non-claims), repairs and maintenance, professional fees, and various overhead costs. Reported within operating expenses, this line impacts operating income directly and is considered part of recurring costs when analyzing sustainable profitability and margins.
What are Other Operating Expenses?
Other Operating Expenses aggregate miscellaneous costs that are directly related to the day-to-day operations of the business but are not significant enough to warrant separate major line items.
Unlike non-operating expenses (e.g., interest or gains on asset sales), these are considered part of core operations and are deducted before arriving at operating income. They are recurring in nature, though amounts can fluctuate with business volume or efficiency initiatives.
This line is common in detailed income statement breakdowns and varies widely by industry—e.g., travel-heavy in consulting, utilities in manufacturing.
Typical Items Included
Common components of Other Operating Expenses include:
Frequently Seen Costs
- Utilities (electricity, water, gas for facilities)
- Office supplies and miscellaneous consumables
- Travel and entertainment (employee business travel)
- Insurance premiums (property, liability—excluding claims)
- Repairs and maintenance (non-capitalized)
- Professional services (audit, consulting not tied to SG&A specifics)
- Communication expenses (telephone, internet)
- Property taxes on operating assets
- Bank and credit card fees (transaction-related)
The exact composition depends on company classification policies—some may group certain items under SG&A instead.
How It Fits in the Income Statement
The flow within operating expenses:
Higher other operating expenses reduce operating income and operating margins, reflecting overhead efficiency.
Tip: Trends in this line can reveal cost control effectiveness or inflation impacts on overhead.
Examples
Example 1: Manufacturing Firm
Example 2: Service Company
Growth in this line without revenue growth may signal inefficiency or cost creep.
Importance in Financial Analysis
Analysts monitor other operating expenses to: - Assess overhead efficiency and scalability - Calculate accurate operating margins - Identify cost inflation or savings opportunities - Benchmark against peers (as % of revenue)
Unlike special charges, these are recurring and included in normalized EBITDA and operating cash flow analysis.
Warning: Significant unexplained growth may indicate hidden cost pressures or classification shifts from other categories.
Key Takeaways
Other Operating Expenses include miscellaneous recurring costs essential to core operations.
Common items: utilities, travel, insurance, repairs, and supplies.
Directly reduce operating income and affect margins.
Considered recurring—include in normalized profitability metrics.
Monitor trends and as % of revenue for insights into overhead efficiency.
Other Operating Expenses
Miscellaneous Costs Directly Tied to Core Business Operations
Other Operating Expenses is a catch-all category in the income statement for recurring expenses that are essential to running the core business but do not fit neatly into major line items like cost of revenue, selling/general/administrative, or research & development. These expenses are typically operational in nature and include items such as utilities, office supplies, travel, insurance (non-claims), repairs and maintenance, professional fees, and various overhead costs. Reported within operating expenses, this line impacts operating income directly and is considered part of recurring costs when analyzing sustainable profitability and margins.
Table of Contents
What are Other Operating Expenses?
Other Operating Expenses aggregate miscellaneous costs that are directly related to the day-to-day operations of the business but are not significant enough to warrant separate major line items.
Unlike non-operating expenses (e.g., interest or gains on asset sales), these are considered part of core operations and are deducted before arriving at operating income. They are recurring in nature, though amounts can fluctuate with business volume or efficiency initiatives.
This line is common in detailed income statement breakdowns and varies widely by industry—e.g., travel-heavy in consulting, utilities in manufacturing.
Typical Items Included
Common components of Other Operating Expenses include:
Frequently Seen Costs
- Utilities (electricity, water, gas for facilities)
- Office supplies and miscellaneous consumables
- Travel and entertainment (employee business travel)
- Insurance premiums (property, liability—excluding claims)
- Repairs and maintenance (non-capitalized)
- Professional services (audit, consulting not tied to SG&A specifics)
- Communication expenses (telephone, internet)
- Property taxes on operating assets
- Bank and credit card fees (transaction-related)
The exact composition depends on company classification policies—some may group certain items under SG&A instead.
How It Fits in the Income Statement
The flow within operating expenses:
Higher other operating expenses reduce operating income and operating margins, reflecting overhead efficiency.
Tip: Trends in this line can reveal cost control effectiveness or inflation impacts on overhead.
Examples
Example 1: Manufacturing Firm
Example 2: Service Company
Growth in this line without revenue growth may signal inefficiency or cost creep.
Importance in Financial Analysis
Analysts monitor other operating expenses to: - Assess overhead efficiency and scalability - Calculate accurate operating margins - Identify cost inflation or savings opportunities - Benchmark against peers (as % of revenue)
Unlike special charges, these are recurring and included in normalized EBITDA and operating cash flow analysis.
Warning: Significant unexplained growth may indicate hidden cost pressures or classification shifts from other categories.
Key Takeaways
Other Operating Expenses include miscellaneous recurring costs essential to core operations.
Common items: utilities, travel, insurance, repairs, and supplies.
Directly reduce operating income and affect margins.
Considered recurring—include in normalized profitability metrics.
Monitor trends and as % of revenue for insights into overhead efficiency.
Related Terms
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