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Revenue to Profit: Top Line and Bottom Line Analysis

Have you ever heard someone in investing refer to something as being either "top line" or "bottom line"? What do these terms mean? You'll have to know the answers to these questions if you begin investing or trading.

Top line represents the turnover of a company, while the bottom line represents its net profit.

When you hear someone refer to the top line, they're often referring to the total revenue of the company whereas When you hear someone talking about bottom line, they're referring to net income.

If you own a Cinnabon franchise, your top line is the money you make from selling cinnamon rolls, cups of coffee, and other items. Wages, rents, utilities, and the cost of goods sold will all be expenses to keep the business running. When all of these expenses are subtracted from total revenue, the bottom line is obtained.

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