What is ‘top’
The top line is a reference to the gross figures presented by the company, such as sales or profit. It’s called the top line because the first position on the company’s financial statements, such as the first entry at the top of the report on profits and losses of the company, as well as the most frequently reserved for reporting of gross sales or revenue. A company that increases its volume continues to increase its top line, or generating top-line growth.
Breaking down the ‘top’
Top line is income or income of the company that reflects the full value of the goods or services sold to consumers in the period of the statement. It is placed at the top of the statement of profit and loss, as each subsequent position refers to expenses or losses which must be subtracted from the total, placed on the top line. Expenses can include any payments made in support of the production of goods or provision of services. Capital losses incurred due to depreciation can also be deducted. Common expenses include, but are not limited to, the cost of the materials needed for the production of goods that were sold and all operating expenses. Taxes are also deducted from this amount.
Top line and bottom line
In the top row there is an item compared to the amount indicated on the bottom line. It reflects the essence of net income, which is often mentioned as the last, or bottom line on the statement of profit and loss of the company. The bottom line reflects what remains after all necessary expenses have been deducted from the top line and reflects the amount of profit which was created in the period statement.
Growth means increased gross revenue brought into the company, nor does it guarantee an increase in profits. Growth in this area can lead to an increase in the dry residue only if it is not kompensiruet increase costs. When the growth goes only to the increase in sales due to the increase in production, increased production costs must be deducted from the top line to determine the new bottom line.
Definition Of Financial Reporting
Statement of profit and loss may also be referred to as the statement of income and expenditure or the statement of profit and loss. It apart from the other financial statements created by companies such as balances and reports on cash flows. The balance sheets of financial documents, tracing the assets and liabilities of the company, including information on share capital while the cash flow statement tools to track operating, investing and financing activities.