A repository of acronyms, jargon, and useful definitions perfect for eCommerce founders & marketers like yourself.
As the name suggests Top Line is basically a sort of information that is displayed in the topmost line i.e. in eCommerce Top Line is an account of the gross figures of a company which is displayed on the topmost line of every company’s income statement. What we mean by gross figures here is the sales figures and revenue figures of any company or business. The topmost line or top line of every company’s income statement is always reserved for displaying the gross sales and revenue figures.
When the sales and revenue figures of a company grow then the top line is said to be growing and the process is usually termed as top-line growth. As mentioned above, the top line is the first entry on any income statement. The top line is mentioned at the top because the gross sales and revenue figures depicted in the top line reflect upon how the sales of a business are going on, that is whether is growing or not, whether the business has successfully taken over the hearts of the consumers by boosting its sales and how the business is growing over different periods of time, has there been growth in the revenue generated or decline. The gross figures in the top line of an income statement can be used to calculate the net income after deducting all the costs, taxes, and other expenditures.
The bottom line is the opposite of the top line and displays the net income of any business. The top line is the account of a business’s revenue and it demonstrates the total sales price of goods or services sold by the company to its consumers within the income statement period. The lines post the top line carry details about the losses or expenses that are deducted from the gross figure in the topline to calculate the net income. These lines contain details about all the money spent in payments done to support the production of goods or rendering of a service. The applicable taxes are also deducted from this total running in the topline to calculate the net income. Once the costs have been subtracted from the top line then a business arrives at its profits, also known as the bottom line.
The top line has some of the most important figures in a company's financial statements. It shows how much business a company does in a given period of time. It also gives an idea about the pure demand of a company's goods or services eliminating the outside effects. If the sales of a company increase then the revenue will be increasing automatically. If the sales are declining or have become stagnant then, it indicates that a company should make changes in its marketing strategies, improve the quality of its products, and should work on improving consumer engagement. All these things can be analyzed after looking at the top line.
As the top line grows the gross revenue of a business increases which also leads to an increase in the net income.