Dear readers, if you are management student or follower of business news, you must have heard the terms top line growth and bottom line growth of a company. You must have heard that top line of a company is good but bottom line is not. Many of you may be aware about the terms and many may not be. Let us understand the difference between these terms:
- Bottom line growth: The bottom line profit or growth is the actual growth or profit of a company. It is calculated by adding all the expenditures or expenses or losses of a company then subtracting from the total revenue or profit of that company. It is the resultant or net profit or income of the company.
- Top line growth: The top line income is the income calculated before subtracting the expenses or expenditures from the revenue or sales. Therefore, it is not the actual income or growth of a company.
Example: If an online company ABC increases his sale by 10%, it does not mean that the company profit increases by 10%., because the company must have done marketing for the same. The profit or actual revenue will be collected after subtracting the expenses incurred due to marketing etc. from the total sales. Thus bottom line reflects the actual profit or growth of company.
I hope you must have understood the difference between the top line and bottom line.