Net Loss
What It Is:
A company reports a net loss when its expenses exceed revenues during a specific period of time.
How It Works/Example:
A net loss is the opposite of a net profit.
A net loss (or a net profit, for that matter) is calculated using the following formula:
Revenues – Expenses – Current Debt = Net Profit or Net Loss
Why It Matters:
The net profit or net loss reported by a company is often known as its "bottom line" because it's reported at the bottom of the income statement.
The main goal of any business is to make more money than it spends. A company cannot survive if it consistantly reports net losses.
Growth at a reasonable price (GARP) is an investment strategy that combines tenets of both growth and value investing by finding companies that show consistent earnings growth but don't sell at overly high valuations. The term was popularized by legendary investor Peter Lynch.
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Cached on May 20, 2013, 1:11 am