The Bottom Line: Is the Company Profitable or Not?

The Bottom Line: Is the Company Profitable or Not? By: Dr. John E. Ware, I

Profitability can be measured by evaluating a company's operating performance for a certain time period. There are many factors to consider when measuring a company's profitability such as gross profit margin, profit margin, earnings per share, price-to-earnings, return on stockholder's equity, and much more. However, this article will focus on the basics.  

Image Source: Wikimedia Commons

It is necessary to review the income statement to learn more about a company's operating performance. The income statement reports a company's revenues and expenses for a particular period of time (i.e. monthly, quarterly, and annually).  Net Income or Net Loss is computed by subtracting expenses from revenues. 

Formula:  Revenues less Expenses equals Net Income or Net Loss. Net income is recognized in a period when revenues are greater than expenses. Whereas, net loss occurs when expenses exceed revenues.  Is the company profitable or not? Answer: Yes, if the bottom line is net income. No, if the bottom line is a net loss.


  1. This comment has been removed by the author.

  2. Gross profit margin is indicating companies net amount from differentiate income and losses. I read the similar post from onlineaccuntinghub

  3. Good articles, Have you heard of Mr Benjamin, Email: --WhatsApp Contact:+1-9893943740-- who work with funding service they grant me loan of $95,000.00 to launch my business and I have been paying them annually for two years now and I still have 2 years left although I enjoy working with them because they are genuine Loan lender who can give you any kind of loan.


Post a Comment

Popular Posts