Certified Professional Contract Manager (CPCM) Practice Exam

Question: 1 / 515

What does the term 'bottom line' refer to in finance?

The total revenue generated by a company

The company’s total expenses before income tax

The net earnings or losses of a company

The term 'bottom line' in finance refers specifically to the net earnings or losses of a company, which is found at the bottom of the income statement. This figure represents the profitability of the company after all revenues have been accounted for and all expenses, including operating expenses, interest, taxes, and any other costs, have been subtracted. It is a critical measure for investors and stakeholders as it indicates how much profit the company has generated over a specific period.

Understanding the bottom line is essential because it helps in assessing the overall financial health of the company and provides insight into how effectively the company is managing its costs relative to its revenues. The bottom line is often highlighted in discussions of a company's performance and is a key focus for executives, analysts, and shareholders looking to gauge the organization's success and sustainability.

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The overall market value of a company

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