Business, Legal & Accounting Glossary
Bottom line is an informal term for net income. It derives from the position of net income on the income statement – it’s the last line, or “bottom line.” The bottom line of net income is the final tally of what the company earned after all expenses have been deducted and all intermediary stages of income – including gross income, operating income, and pretax income – have been calculated. Thus bottom line has become a general term meaning “crux,” “gist,” “the last word,” or “cut to the chase.” Bottom line should not be used in formal business communication. It’s unclear whether bottom line means net income per se or net income on a per share basis (let alone basic EPS versus diluted EPS). Moreover, net income may be adjusted for extraordinary items and/or accounting changes – important refinements that are not fully described by the simplistic use of bottom line. Indeed, the bottom line is that “bottom line” is now cliche and probably best avoided entirely.
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This glossary post was last updated: 4th February, 2020 | 6 Views.