The bottom line is informal language for a company's net income, the profit left after every expense, loss and income tax has been deducted from revenues and gains. The phrase comes from its position as the final line of the income statement.
Top line and bottom line
Business writers contrast the bottom line with the top line, meaning revenue or sales, which appears at the head of the statement. A company can grow its top line while its bottom line shrinks if costs rise faster than sales. Between the two lines sit measures such as gross profit, operating income and income before taxes, each of which strips out a further layer of cost.
A simple example shows the idea. A retailer with sales of $900,000, cost of goods sold of $540,000, operating expenses of $250,000, interest of $10,000 and income tax of $20,000 has a bottom line of $80,000. If expenses had exceeded revenues, the bottom line would be a net loss, often shown in parentheses.
The phrase is widely used outside accounting to mean the final result or the essential point of anything. In financial analysis it reminds readers that, whatever the story told about sales growth or adjusted figures, investors and lenders eventually look at what the business actually earned. Analysts often compare the bottom line with operating cash flow, because a profit that never turns into cash may signal aggressive accounting.