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. Operating Income

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

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

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

    The portion of an organization's income that is derived from ...
  6. Earnings

    The amount of profit that a company produces during a specific ...
Related Articles
  1. Zooming In On Net Operating Income
    Investing

    Zooming In On Net Operating Income

  2. Analyzing Operating Margins
    Fundamental Analysis

    Analyzing Operating Margins

  3. Understanding The Income Statement
    Forex Education

    Understanding The Income Statement

  4. Finding Profit In Troubled Stocks
    Investing

    Finding Profit In Troubled Stocks

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center