‘Bottom Line’ is a commonly used term for ‘Net Profit’ or the profit that a company makes after deducting all expenses and taxes.
For example, let’s assume you start a bread business. You sell 100 breads at a price of ₹ 50 each. Your total sales or ‘top line’ will be 100 x 50 = ₹ 5000. After deduction all expenses like salary, electricity, cost of raw materials for making the bread and after deducting taxes (GST), your total profit is ₹ 1000. That will be the ‘bottom line’ of your company.
The net profit appears at the bottom of the ‘Profit And Loss’ statement – which is the reason why it’s called ‘Bottom Line’.
On business channels, you’ll hear television anchors say: “HDFC Bank reported 20% year-on-year growth in its bottomline” or “Bottom line of HDFC Bank grew 20% YoY”
This means the total profit of HDFC Bank has increased by 20% as compared to the same period last year.
That, in simple words, is the definition of bottom line. If you have any questions or doubts, kindly post a comment below.
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