Operating expenses (OPEX) in the context of financial analysis refers specifically to the recurring, cash-based operational costs of a business, used to assess the true cost structure after separating non-cash charges (depreciation, amortisation) which are included in the broader operating expense line but excluded from EBITDA. Understanding the composition of OPEX — fixed versus variable, recurring versus exceptional — is essential for building accurate margin projections in DCF models and due diligence normalisation.

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Example: a Swiss manufacturer presents total operating costs of CHF 15.0 million including CHF 1.2 million depreciation and CHF 800,000 non-recurring restructuring charges. Normalised recurring OPEX is CHF 13.0 million — excluding non-cash depreciation (add-back to EBITDA) and non-recurring items. This normalised OPEX, applied to projected revenues, produces a defensible normalised EBITDA margin of 18.7% versus 14.2% reported.

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Hectelion decomposes operating expenses into recurring cash OPEX and non-cash/non-recurring items in every quality of earnings review.