Bottom line – definition and meaning

The term bottom line can mean net earnings, net income, or earnings per share. The net income figure appears at the bottom of a company’s income statement, hence the expression. The term may also refer to a line below which you would never go. In other words, the minimum amount you would accept.

A business’ bottom line is the total profit it made on the income statement, minus all the losses it incurred. The losses it incurred include the cost of goods, interest payments on debts, and tax. When referring to earnings per share (EPS), we divide the figure by the number of outstanding shares in the firm.

Companies try to improve their bottom lines in three main ways: First, by increasing profits by generating more sales. Second, by reducing costs. Third, by improving productivity, i.e. production per hour per worker.

In financial jargon, the term is the opposite of Top Line when discussing the financial performance of a company.

While one refers to the net income or net earnings of a company, the ‘top line’ refers to the gross sales. Gross sales is the revenue that the company generates.

Gross sales or revenues appear at the top of the Profit & Loss Statement or Income Statement.

Bottom line – other meanings

Final Outcome: the term may also refer to the conclusion of something. For example “The bottom line is that she will have to sell her house. In other words, there is nothing she can do to prevent its sale.”

Money Owed: When you want to cut to the chase and find out how much you owe, you can say “So, what’s the bottom line? Just give it to me. How much do I owe?”

Minimum Amount Accepted: If you go for a job interview, it is the lowest salary you would accept. You might say “This job is very interesting, but it is below my bottom line.” This means that it pays less than the minimum you could accept. In other words, it does not pay enough.

The Most Important Fact: as in the phrase “The bottom line is that without the extra $1 million, the project will never get off the ground.”

According to the Cambridge Dictionary, bottom line is:

“The final line in the accounts of a company or organization, stating the total profit or loss.”