Bottom-Line Growth vs. Top-Line Growth: What is the Difference & Understanding.

 

Source - Unsplash : Image by - @firmbee

Introduction :

As the taste came from the heading of this topic, that this article is related something to the top part & bottom part of the Profit and Loss statement. Correct!

In this article we are going to learn about the Top Line Growth and Bottom Line Growth a very simple way.....

First we will take a look on P&L STATEMENT i.e INCOME STATEMENT structure as given in below fig.

 INCOME - STATEMENT 

  REVENUE / SALES     - This is known as TOP LINE of  Income Statement. (Total amount of sales company made)

  EBITDA      - This is known as 1st MIDDLE PART of Income Statement.

 INTEREST + IT + DEPRECIATION + AMORTIZATION     - This is known as 2nd MIDDLE PART of Income Statement.

And finally

  EBITDA - ( INTEREST + IT + DEP + AMORT )  =  NET PROFIT 

  NET PROFIT     - This is known as BOTTOM  LINE of Income Statement.

Conclusion :

So, in a company's financial statement, the bottom line and top line are two of the most critical statistics. The net profits of a corporation is its bottom line & the total income of a business is referred to as the top line.

More revenue means the company can spend more on ads, promotions, new product creation, and employee recruiting and other activities and events. Whereas the bottom line show how well a management can produce a product or provide a service that generates enough sales profit to cover overhead costs, with maximum efficiency.

• Top Line is related to revenue generation.

• Bottom Line is the real growth.

Disclaimer : This article is only for information and knowledge sharing and not for any type of recommendation for investment. Do your own analysis before investment.