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A company's bottom line is its net income, or the "bottom" figure on a company's income statement.

More specifically, the bottom line is a company's income after all expenses have been deducted from revenues. These expenses include interest charges paid on loans, general and administrative costs and income taxes. A company's bottom line can also be referred to as net earnings or net profits. For example, for the quarterly period ended March 31, 2017, Bank of America's (BAC) bottom line figure was $4.86 billion. This amount represents a 44% bottom line growth from the same three-month period in 2016.

The top line refers to a company's gross sales or revenues. Therefore, when people comment on a company's "top-line growth", they are making reference to an increase in gross sales or revenues. For the same period in 2017, BofA's top line was $22.25 billion. Its revenues increased from $20.79 billion in its 2016 first quarter, making its top line growth approximately $1.46 million.

For example, a company would be experiencing top-line growth if a new advertising campaign caused a 15% increase in sales for its widgets, which resulted in an increase of $2 million to the revenue. Bank of America's top line growth was mostly due to an increase in revenue from its trading division and an increase in interest rates. Bottom-line growth would occur in a situation where a company found a new supplier for raw materials that results in a cost savings of $4 million. BofA's bottom line growth for the quarter was brought about by a $287 million cut in operating expenses.

Both these figures are useful in determining the financial strength of a company, but they are not interchangeable. Bottom line describes how efficient a company is with its spending and operating costs and how effectively it has been controlling total costs. Top line, on the other hand, only indicates how effective a company is at generating sales and does not take into consideration operating efficiencies which could have a dramatic impact on the bottom line.

However, this is not to say that a company cannot experience both top-line and bottom-line growth at the same time. This can be achieved if a company earns more revenue (top line) and reduces its operating costs (bottom line).

(To learn more, see Understanding the Income Statement.)

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