Operating Loss - OL

AAA

DEFINITION of 'Operating Loss - OL'

The net loss recorded as a result of a company's unprofitable operation, considering only the company's operating income versus its operating expenditures. An operating loss does not consider the effects of interest income, interest expense or taxes, but in some cases includes depreciation expense. A company which consistently generates operating losses will require outside financing in order to avoid bankruptcy.

INVESTOPEDIA EXPLAINS 'Operating Loss - OL'

An operating loss indicates that a company's core operations are not profitable and that changes need to be made either to increase revenues or to decrease costs. An operating loss is sometimes expected for certain start-up companies which incur high costs in an attempt to grow quickly.

In most other situations, an operating loss is a sign of potential distress at a company. An operating loss can be a particularly dire indicator for a company heavily financed with debt because the company has lost money even before considering interest payments, which may be substantial.

RELATED TERMS
  1. Earnings Before Interest & Tax ...

    An indicator of a company's profitability, calculated as revenue ...
  2. Earnings

    The amount of profit that a company produces during a specific ...
  3. Operating Income

    The amount of profit realized from a business's operations after ...
  4. Net Operating Loss - NOL

    A period in which a company's allowable tax deductions are greater ...
  5. Operating Profit

    The profit earned from a firm's normal core business operations. ...
  6. Non-Operating Income

    The portion of an organization's income that is derived from ...
Related Articles
  1. Analyzing Operating Margins
    Fundamental Analysis

    Analyzing Operating Margins

  2. Understanding The Income Statement
    Forex Education

    Understanding The Income Statement

  3. Zooming In On Net Operating Income
    Investing

    Zooming In On Net Operating Income

  4. Finding Profit In Troubled Stocks
    Investing

    Finding Profit In Troubled Stocks

comments powered by Disqus
Hot Definitions
  1. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  2. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer ...
Trading Center