Bottom Line - Revision history

User at 19:54, 1 March 2021

2021-03-01T19:54:41Z

User at 19:54, 1 March 2021

2021-03-01T19:54:22Z

User at 01:09, 25 February 2021

2021-02-25T01:09:05Z

User: Created page with "'''Content Coming Soon'''"

2018-12-04T22:44:47Z

Created page with "'''Content Coming Soon'''"

New page

'''Content Coming Soon'''

← Older revision		Revision as of 19:54, 1 March 2021
Line 5:		Line 5:


−	[[File:Bottom Line.png\|400px\|Bottom Line]]	+	[[File:Bottom Line.png\|400px\|Bottom Line]]<br />
	source: Patriot Software		source: Patriot Software

@@ Line 1: / Line 1: @@
-The '''Bottom Line''' refers to a company's earnings, [[Profit|profit]], [[Net Income|net income]], or [[Earnings Per Share (EPS)|earnings per share (EPS)]]. The reference to bottom line describes the relative location of the net income figure on a company's [[Income Statement|income statement]]. Bottom line is commonly used in reference to any actions that may increase or decrease net earnings or a company's overall profit. A company that is growing its earnings or reducing its costs is said to be improving its bottom line. Most companies aim to improve their bottom lines through two simultaneous methods: increasing [[Revenue|revenues]] (i.e., generate [[Top Line|top line]] growth) and improving [[Efficiency|efficiency]] (or cutting costs).<ref>Definition - What Does Bottom Line Mean? [https://www.investopedia.com/terms/b/bottomline.asp Invetopedia]</ref>
+The '''Bottom Line''' refers to a company's earnings, [[Profit|profit]], [[Net Income|net income]], or [[Earnings Per Share (EPS)|earnings per share (EPS)]]. The reference to bottom line describes the relative location of the net income figure on a company's [[Income Statement|income statement]]. Bottom line is commonly used in reference to any actions that may increase or decrease net earnings or a company's overall profit. A company that is growing its earnings or reducing its costs is said to be improving its bottom line. Most companies aim to improve their bottom lines through two simultaneous methods: increasing [[Revenue|revenues]] (i.e., generate [[Top Line|top line]] growth) and improving [[Efficiency|efficiency]] (or cutting costs).<ref>Definition - What Does Bottom Line Mean? [https://www.investopedia.com/terms/b/bottomline.asp
 '''The Bottom Line as an Indicator of [[Business]] Performance<ref>The Bottom Line and Limitations of Bottom Line as an Indicator of [[Business]] Performance [https://www.thebalancecareers.com/understanding-the-bottom-line-in-business-2275163 the balanace]</ref>'''<br />
@@ Line 19: / Line 41: @@
 In financial reporting for publicly listed and traded firms, it is important to look at the detailed notes including footnotes. It helps management (and other [[Stakeholder|stakeholders]]) understand the assumptions, accounting approaches, and final derivation of the bottom line number.

← Older revision		Revision as of 01:09, 25 February 2021
Line 1:		Line 1:
−	'''~~Content Coming Soon~~'''	+	The '''Bottom Line''' refers to a company's earnings, [[Profit\|profit]], [[Net Income\|net income]], or [[Earnings Per Share (EPS)\|earnings per share (EPS)]]. The reference to bottom line describes the relative location of the net income figure on a company's [[Income Statement\|income statement]]. Bottom line is commonly used in reference to any actions that may increase or decrease net earnings or a company's overall profit. A company that is growing its earnings or reducing its costs is said to be improving its bottom line. Most companies aim to improve their bottom lines through two simultaneous methods: increasing [[Revenue\|revenues]] (i.e., generate [[Top Line\|top line]] growth) and improving [[Efficiency\|efficiency]] (or cutting costs).<ref>Definition - What Does Bottom Line Mean? [https://www.investopedia.com/terms/b/bottomline.asp Invetopedia]</ref>
		+
		+	'''The Bottom Line as an Indicator of [[Business]] Performance<ref>The Bottom Line and Limitations of Bottom Line as an Indicator of [[Business]] Performance [https://www.thebalancecareers.com/understanding-the-bottom-line-in-business-2275163 the balanace]</ref>'''<br />
		+	The bottom line numbers are an important component of the [[Balanced Scorecard\|scorecard for management]].<br />
		+	Positive and growing profitability over time is a testament to a variety of factors including:
		+	*Good [[Market\|market]] and [[Customer\|customer]] selection
		+	*The creation and delivery of [[Product\|products]] and [[Service\|services]] valued by customers
		+	*Effective allocation of investment dollars in support of [[Target Market\|targeted customers]]
		+	*Efficient control of costs across the organization
		+	*Positive marketplace and macroeconomic factors
		+	Alternatively, declining or low bottom line numbers over time is an indication of challenges in one or more of the areas mentioned above and should be examined by management. [[Shareholder\|Shareholders]], the [[Board of Directors\|board of directors]], and [[Employee\|employees]] all rely on the bottom line numbers after each accounting period (usually quarterly) to assess the effectiveness of the company's [[Marketing Strategy\|marketplace strategy]] and internal management. Of course, when bonuses or annual salary increases are tied to bottom-line results, employees naturally pay more attentive to these numbers.
		+
		+	'''The Limitation of Bottom Line Numbers as an Indicator of Performance'''<br />
		+	Although profitability numbers are important measures of a company's current success (and are used to compare previous time frames), they are not a tell-all. They do not tell [[Management\|management]], directors, shareholders, or employees what worked or what failed.
		+
		+	Poor profitability numbers are an indication that something is wrong, ranging from strong competition to adverse economic circumstances to a failed strategy to runaway costs.
		+
		+	Likewise, positive numbers do not highlight what part of the company's overall approach is working. It is possible for strong economic conditions (or competitor failure) to lift revenues and improve profits, in spite of poor cost control or a weak long-term strategy.
		+
		+	In financial reporting for publicly listed and traded firms, it is important to look at the detailed notes including footnotes. It helps management (and other [[Stakeholder\|stakeholders]]) understand the assumptions, accounting approaches, and final derivation of the bottom line number.