DEFINITION of 'Red'

Red is a business expression relating to a negative balance on a company's financial statements.

A related term, red ink, describes the same meaning: a financial loss.

BREAKING DOWN 'Red'

The phrase "in the red" is used widely to refer to companies that have not been profitable within their last accounting period. This term is derived from the color of ink used to by accountants to enter a negative figure on a company's financial statements.

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.

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.

RELATED TERMS
  1. Red Ink

    Red ink is financial jargon describing the red coloring of accounting ...
  2. Red Candlestick

    Red candlesticks represent a downward price movement where the ...
  3. Financial Statements

    Records that outline the financial activities of a business, ...
  4. Real Body

    In candlestick charting this is the wide part of a candle that ...
  5. Joint Probability

    A joint probability is a statistical measure where the likelihood ...
  6. General Ledger

    A company's main accounting records. A general ledger is a complete ...
Related Articles
  1. Investing

    Red Hat Stock Jumps on Strong Earnings, Outlook

    Talk about ending a year with a bang: Open-source software leader Red Hat (NYSE: RHT) absolutely nailed its fourth quarter and fiscal 2016, which it reported Monday after the close, and its ...
  2. Insights

    Target Red Card: What You Need to Know (TGT)

    Target Corp’s Red Card is fantastically popular and a win-win for shoppers and the retailer.
  3. Investing

    Red Hat: Why This Stock Is The Comeback Kid

    Red Hat was buoyed by a first-quarter earnings beat and an upgrade of its stock.
  4. Investing

    Look For These Red Flags In The Income Statement

    Companies can overstate their revenues and understate their losses to boost investor confidence. Learn how to spot the these red flags in income statements.
  5. Trading

    Tips for Stock Charts That Enhance Your Analysis

    Find out how to create well-designed charts that will enhance your market analysis.
  6. Investing

    What Does Negative Shareholder Equity On A Balance Sheet Mean?

    Negative shareholder equity on a company’s balance sheet is a red flag that should prompt potential investors to take a closer look before committing their money.
  7. Insights

    Goldman Sachs Invests in Red Planet Hotels (GS)

    Goldman Sachs is investing $70 million in Red Planet Hotels. The Asian budget hotel chain is planning on using the capital for pre-IPO expansion.
  8. Investing

    Apple Releases New Products and an App

    The company announced iPhones in a new red color, a new iPad and a new social video editing app.
  9. Investing

    Microsoft's New iOS App Helps Clears Colorblind (MSFT)

    A new Microsoft app made for Apple iOS will help color-adjust images for the colorblind.
RELATED FAQS
  1. What do the different colored candlesticks mean?

    A typical candlestick chart is composed of a series of bars, known as candles, which vary in height and color. Read Answer >>
  2. How A P&L Statement Differs From A Balance Sheet?

    There are stark differences between the profit and loss statement and the balance sheet. And investors must know how to interpret ... Read Answer >>
  3. What does financial accounting focus on?

    Learn the main tenets of financial accounting, the guidelines by which it is governed and how outsiders use it to gauge a ... Read Answer >>
  4. What is the difference between a compiled and a certified financial statement?

    All publicly-traded companies are required to provide financial statements, including a balance sheet, cash flow statement ... Read Answer >>
  5. How do marketable securities impact a company's financial statements?

    Understand how the various components of the financial statements are impacted by investments in marketable securities owned ... Read Answer >>
  6. What kind of financial reporting requirements does GAAP set out?

    Look at some of the major financial reporting requirements set forth by the generally accepted accounting principles and ... Read Answer >>
Hot Definitions
  1. Internal Rate of Return - IRR

    Internal Rate of Return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.
  2. Limit Order

    An order placed with a brokerage to buy or sell a set number of shares at a specified price or better.
  3. Current Ratio

    The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations.
  4. Return on Investment (ROI)

    Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency ...
  5. Interest Coverage Ratio

    The interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a company can pay interest ...
  6. Cash Conversion Cycle - CCC

    Cash conversion cycle (CCC) is a metric that expresses the length of time, in days, that it takes for a company to convert ...
Trading Center