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Net income, profit, or earnings per share represent the company’s bottom line (EPS). The “bottom line” of a company’s income statement is its net income. The bottom line shows a company’s long-term profitability and any money left over for dividends and retained earnings. The money left over could fund projects, pay off debts, or reinvest in the business.
What is the bottom line in business?
The bottom line refers to the net profit of a business. The bottom row is part of the bottom income statement. Expenses are deducted from your income, and you get a profit. The bottom row shows the company’s long-term profitability and the money left for dividends and retained earnings. The remaining money can repay debt, fund a project, or reinvest in a business. The conclusion is the company’s net profit over some time. It will be displayed in the final result of the financial statements. Revenue is calculated by subtracting costs from total sales or revenue. This shows how profitable your business was during a particular accounting period. Management can use a variety of strategies to increase revenue. B. Focus on marketing activities to reduce costs or drive more sales. On the other hand, the top row shows the company’s total sales or revenue for a particular accounting period. The bottom line is calculated using the top line or gross profit. Alternatively, the triple bottom line mindset emphasises that companies need to prioritise their commitment to profitability and social and environmental responsibility.
The bottom line meaning
The “bottom line” refers to any action that has the potential to decrease or increase net earnings or a company’s overall profit. When a business’s earnings or costs rise, the bottom line improves. Most companies try to improve their bottom lines by combining increasing revenues (i.e., top-line growth) and efficiency (or cutting costs).
As the bottom line, net income is shown at the bottom of the income statement.
The bottom line is the net income reported at the bottom of the income statement. While there are many layouts for the income statement, they all result in net income at the end of the financial statement.
The income statement begins at the top with sales or service revenues from a company’s primary business activity. Other sources of income, such as interest or investment income, come next. The following section summarises expenses, which can be grouped and reported according to industry and corporate preferences. Total revenue minus total expenses results in net income for the accounting period at the bottom of the income statement, which can be retained by the company or distributed as dividends.
Management can put in place strategies to increase profits. Higher top-line revenues can help the bottom line. Improving product returns, increasing production, expanding product lines, or raising prices are all options.
Bottom line examples
The bottom line, often known as the essential point, is the end conclusion, outcome, or choice. The bottom line is the last line on a balance sheet that shows profit and loss. The bottom line is an example of the final rule you come up with after summarizing all its reasons.
Example
Cigna, a publicly listed health insurance firm, reported a bottom line of $8.49 million for the fiscal year ended December 31, 2020, up 65.8% from the previous year.
It earned $8.15 million in income from operations after recording total revenues of $160.40 million and total benefits and expenses of $152.25 million. Gains and other income totalling $4.35 million were added to the revenue from operations, and expenditures and losses totalling $1.64 million were removed, resulting in an income before taxes of $10.87 million. After subtracting $2.38 in taxes, the net profit was $8.49 million.
Conclusion
After all, the bottom line is a percentage that represents an organization’s net profits or income. The earnings per share (EPS) profit for stockholders is also the bottom line. The bottom line percentage will be shown on a company’s income statement. Rather than a number, it is a percentage of sales, also known as a profit margin. Low-profit margins indicate that a company is not operating efficiently.
