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. Non-Operating Income

    The portion of an organization's income that is derived from ...
  3. Operating Profit

    The profit earned from a firm's normal core business operations. ...
  4. Net Operating Loss - NOL

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

    The amount of profit realized from a business's operations after ...
  6. Earnings

    The amount of profit that a company produces during a specific ...
RELATED FAQS
  1. How reliable or accurate is marginal analysis?

    Marginal analysis is designed to show how economic reasoning allows actors to accomplish more by understanding limits on ... Read Full Answer >>
  2. What debt/equity ratio is typical for companies in the utilities sector?

    In the utilities sector, for companies providing general utilities such as gas and electricity, the average debt/equity ratio, ... Read Full Answer >>
  3. What price-to-earnings ratio is average in the utilities sector?

    As of December, 2014, the average price-to-earnings (P/E) ratio for the utilities sector is approximately 23, which is considerably ... Read Full Answer >>
  4. What can I learn about a company by studying its earnings report?

    Fundamental analysts often pore over quarterly earnings reports when the reports arrive, hoping to gain an inside track on ... Read Full Answer >>
  5. What metrics can be used to analyze a telecommunications company if they have very ...

    Telecommunications companies play a very crucial role in the economy by providing access to voice, text, video and other ... Read Full Answer >>
  6. What are some good online resources for me to learn about Generally Accepted Accounting ...

    The two definitive authorities on developing and interpreting the U.S. generally accepted accounting principles, or GAAP, ... Read Full Answer >>
Related Articles
  1. Investing

    Zooming In On Net Operating Income

    NOI is a long-run profitability measure that smart investors can count on.
  2. Fundamental Analysis

    Analyzing Operating Margins

    Find out how to put this important component of equity analysis to work for you.
  3. Forex Education

    Understanding The Income Statement

    Learn how to use revenue and expenses, among other factors, to break down and analyze a company.
  4. Investing

    Finding Profit In Troubled Stocks

    Find out the difference between a company capable of surviving a share-price beating and one that cannot.
  5. Active Trading

    Is That Airline Ready For Lift-Off?

    Break through the clouds to see if these stocks will rocket higher, or crash and burn.
  6. Charts & Patterns

    Pros & Cons Of A Passive Buy And Hold Strategy

    Forget market timing: we look at the pros and cons of the tried, tested, and true strategy of buying and holding stocks for the long-term.
  7. Active Trading

    Top Natural Gas Stocks Worth Considering

    The stock prices of the largest natural gas producers are at 12-month lows, creating an opportunity for investors. Here are some to consider.
  8. Fundamental Analysis

    Costco’s Business Model Is Smarter Than You Think

    Why is Costco so successful? What differentiates the company from its competitors and why is its profit so small compared to Wal-Mart?
  9. Fundamental Analysis

    The Risks Of Investing In The Gun Industry

    Investing in the gun industry could be an interesting proposition, but it all depends on timing.
  10. Stock Analysis

    How To Analyze Netflix's Income Statements

    Learn how to read Netflix's income statement, calculate net income and interpret EPS to evaluate the company's current financial condition.

You May Also Like

Hot Definitions
  1. Radner Equilibrium

    A theory suggesting that if economic decision makers have unlimited computational capacity for choice among strategies, then ...
  2. Inbound Cash Flow

    Any currency that a company or individual receives through conducting a transaction with another party. Inbound cash flow ...
  3. Social Security

    A United States federal program of social insurance and benefits developed in 1935. The Social Security program's benefits ...
  4. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version ...
  5. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  6. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!