Opex Mapping
This article explains how Operating Expense (Opex) variables are mapped in Model Reef.
You will learn:
How Opex variables map into the P&L.
How Opex affects payables and operating cashflow.
How to design Opex categories for analysis and reporting.
Opex mapping is important for understanding cost structure below Gross Profit and its impact on EBITDA.
Opex variable mapping into the P&L
Each Opex variable has:
A type set to Opex.
A category and subcategory such as
Opex - Marketing,Opex - Rent,Opex - IT.A branch that owns the cost.
In the P&L:
Opex variables are shown below Gross Profit and above EBITDA.
Staff variables are shown separately even though they also reduce EBITDA.
Categories and subcategories define how Opex lines are grouped in the P&L and in reports.
Opex mapping gives you a clear view of overheads and discretionary spend.
Opex mapping into the Balance Sheet
Opex mapping affects the Balance Sheet through Accounts Payable.
Rules:
Opex is accrued when the cost is incurred, not when it is paid.
If there is a delay between accrual and payment:
Accounts Payable increases when expense is accrued.
Accounts Payable decreases when cash is paid.
Cash reduces when the payment occurs.
Staff related payables share the same Accounts Payable bucket but are tracked by category for drill down.
Opex mapping into the Cashflow Statement
In the Cashflow Statement:
Opex variables contribute to Payments to suppliers within Operating cashflows.
Together with COGS and Staff, they define most of the recurring operating outflows.
Payment timing is controlled by delay settings at the variable level.
This allows you to understand both the level and timing of overhead cashflows.
Designing Opex categories
Good practice for Opex mapping:
Group costs into meaningful buckets for decision making, for example:
Marketing and sales.
Office and facilities.
Technology and software.
Professional services.
Other overheads.
Align Opex categories with how management and the board think about spend.
Use subcategories to break down large or complex categories where helpful.
Keep naming consistent across branches and scenarios.
Well designed Opex mapping supports cost control, planning and scenario analysis.
Opex in scenarios
Scenario design often involves:
Increasing or decreasing Opex in certain categories.
Delaying discretionary spend in downside scenarios.
Scaling Opex with revenue or headcount via drivers in upside scenarios.
Because Mapping is structural and scenarios are separate models, you can:
Keep the same category structure.
Change the amounts and drivers per scenario.
Compare Opex and EBITDA across scenarios cleanly.
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