DEFINITION of 'Red Ink'

Red ink is business jargon describing a financial loss. When accountants make physical entries into a financial ledger, red ink is used to show a negative number. Black ink is used to show that a number is positive or profitable.

BREAKING DOWN 'Red Ink'

Red as a color is often used in business to indicate that something unwanted is happening. The color is also used in this context outside of a firm's balance sheet. For example, regulations governing businesses are often referred to as red tape. Investors may also refer to a security position losing money as being in the red.

When an entity's books were maintained manually, or by hand, red (and black) ink were convenient methods to call attention to those variables losing money, and those adding value.

Today, most financial and operational ledgers are maintained electronically; it is not uncommon for software to utilize red and black coloring to highlight results.

Red ink is synonymous with the business expressions: bleeding red ink or in-the-red. Whereas, it's common to hear a healthy business describes as in the black.

Most people are familiar with the idea behind Black Friday: The day after the Thanksgiving holiday where retailers deeply discount merchandise to attract shoppers. That Friday is called Black Friday because it marks a turning point where many retailers who've been operating "in-the-red" see their finances turn to profit (black) on account of heavy sales on Black Friday. This leads into the holiday season.

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