Bottom Line (by Kara Greenberg) - 趙永祥的數位歷程檔

The bottom line refers to a company's earnings, profit, net income, or earnings per share (EPS). The reference to the bottom line describes the relative location of the net income figure on a company's income statement.

The term "bottom line" is commonly used in reference to any actions that may increase or decrease net earnings or a company's overall profit. A company that is growing its earnings or reducing its costs is said to be improving its bottom line. Most companies aim to improve their bottom lines through two simultaneous methods: increasing revenues (i.e., generate top-line growth) and improving efficiency (or cutting costs).

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Why is 'Bottom Line' the Term of the Day?

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This week will be packed with earnings, and while companies from a wide range of industries are expected to report results, the energy sector could prove to be a standout following record profits from ExxonMobil (XOM), Chevron (CVX), and Shell (SHEL) last week on the back of soaring oil prices. Major oil and gas companies reporting results this week will include Diamondback Energy, Marathon Petroleum, Occidental Petroleum, Devon Energy, Duke Energy, and EOG Resources.

Chevron’s results had beaten estimates on both top and bottom lines, as earnings more than tripled to $11.82 billion or $5.82 per share, and revenue rose 83% to $68.76 billion. ExxonMobil’s profit was $17.9 billion, also more than three times that of 2021, with EPS of $4.14. However, by contrast, ExxonMobil missed top line revenue expectations despite increasing 70.8% year-over-year, at $115.68 billion compared to expectations of $132.7 billion. Shares of both companies surged following the earnings results.

Both top and bottom line figures are useful in evaluating the financial strength of a company. While top line figures like revenue help indicate how effective a company is at generating sales, bottom line figures like profit can help show how well a company is managing its expenses. The most profitable companies typically grow both their top and bottom lines.

-Kara