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What are “top line” and “bottom line” for companies and stocks? April 27, 2012

Posted by antibeppegrillo in growth stock, investment, investment strategies.
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What do bottom-line and top-line mean for stocks and companies?

The answer is simple: “TOP-LINE” means REVENUES and “BOTTOM-LINE” means EARNINGS: this graph below is a good and clear example:

Top line shows revenue and bottom line shows earningns for EBIX

Top line shows revenue and bottom line shows earningns for EBIX

The graph also helps me to understand why Revenue is called TOP LINE and Earnings BOTTOM LINE:

Since Earnings = Revenue – Expenses, then Earnings are smaller (less dollars) than Revenues. On a graph showing dollars over time, Revenues will always be the top line and Earnings the bottom line.

Of course a good company should show healthy growth bot on the top line and on the bottom line. I had to look for those definitions to understand the meaning of the frase:

“It’s been a couple of years since Amazon beat expectations on both the top and the bottom line” from this article

It is so good to beat expectations on both top and bottom lines, that Amazon stock price went up 15% in a day after this event.

Unfortunately I was never able to buy AMZN shares because of their 90 P/E ratio price tag.

I hope that some of my lagging stocks will ” beat expectations on both the top and the bottom line” too….

Sources:

http://www.investopedia.com/ask/answers/149.asp#axzz1tEJYGSfU

for graph: http://www.gurufocus.com/news/144526/ebix-improvement-in-operating-efficiency-with-high-return

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