what is an operating loss ol 
an operating loss occurs when a company s operating expenses exceed gross profits or revenues in the case of a service oriented company a company s operating profit is its profit before interest and taxes interest and taxes are not considered operating expenses in the way that cost of goods sold selling general and administrative expenses are often companies generate enough revenue to cover the operating expenses and make an operating profit an operating loss does not consider the effects of interest income interest expense extraordinary gains or losses or income or losses from equity investments or taxes these items are below the line meaning they are added or subtracted after the operating loss or income if positive to arrive at net income if there is an operating loss there is usually a net income loss unless an extraordinary gain e g sale of an asset was recorded during the accounting period understanding operating lossesan operating loss indicates that a company s core operations are not profitable and that changes need to be made to increase revenues decrease costs or both the immediate solution is typically to cut back on expenses as this is within the control of company management layoffs office or plant closings or reductions in marketing spending are ways to reduce expenses an operating loss is expected for start up companies that mostly incur high expenses with little or no revenues as they attempt to grow quickly in most other situations if sustained an operating loss is a sign of deteriorating fundamentals of a company s products or services however that s not necessarily the case if a company is spending more money in the short term to hire additional employees conduct a fresh sales and marketing campaign or lease extra office space in anticipation of expanded future business in such a scenario a company may be hit with a few or several quarters of operating losses until the bump up of the expenditures declines and the benefits of the added spending manifest in the top line real world example of operating lossfor a company that manufactures products gross profit is sales less the cost of goods sold cogs in 2009 the year that the great recession took hold huntsman corporation recorded an operating loss of over 71 million that year gross profit was 1 068 million while operating expenses composed of selling general and administration sg a research and development r d restructuring impairment and plant closing costs totaled 1 139 million leaving the chemical maker with an operating loss the last expense line item was 152 million in charges such expenses in most cases are considered non recurring which means that a normalized operating income loss number would exclude the charge instead of the operating loss an adjusted result would be an operating profit of 81 million 