In business, the top line and bottom line are two important figures on a companys income statement. The top line refers to a companys gross revenues or total sales before subtracting any operational costs. On the other hand, the bottom line refers to a companys net income, which is the amount of revenue left after deducting all expenses, including cost of goods sold, fixed overhead and administrative expenses, interest charges on loans and other debts, depreciation and amortization charges, and federal, state, and local income taxes. The bottom line is also referred to as net earnings or net profit.
While the top line indicates how effective a company is at generating sales and revenue, the bottom line describes how efficient a company is with its spending and managing its operating costs. Both figures are useful in determining the financial strength of a company, but they are not interchangeable. Bottom-line growth shows the trends in profitability for a company, while top-line growth emphasizes improving sales pipeline metrics and revenue.
