Net Loss

Written by Fmi.Online Friday December 9, 2022
Net loss, also called loss, refers to a company’s financial position when total expenses exceed total revenues. In other words, net loss is the amount of money the company lost during the period. This is the negative amount of cash that is left over after all the expenses have been paid during the period. If total revenues were greater than total expenses, the company would have net income  instead of net loss. Net loss is calculated by subtracting total expenses from total revenues.

Explanation :

Net loss appears at the bottom of the income statement  or profit and loss statement after all of the cost of goods sold and operating expenses have been subtracted out. This is why many people call net loss the “bottom line.”

In a nutshell :

  • A net loss occurs when the sum total of expenses exceeds the total income or revenue generated by a business, project, transaction, or investment.
  • Businesses would report a net loss on the income statement, effectively as a negative net profit.
  • Many factors can contribute to a net loss including low revenues, strong competition, unsuccessful marketing campaigns, and increased cost of goods sold (COGS). 
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