what is net loss

A net loss is a financial term that refers to a situation where a company's expenses, including taxes, fees, interest, and depreciation, exceed its income or revenue generated during a specific period. In other words, it is the opposite of net profit. A net loss indicates that the company has incurred a loss during that time frame. It is commonly referred to as a net operating loss (NOL) for tax purposes.

A net loss has a significant impact on a company's financial statements, particularly on the income statement, where it appears as a negative value. It can be caused by various factors such as low revenue, increased expenses, or insufficient pricing strategies. Companies may carry forward net losses into future tax years to offset gains or profits in those years.

To calculate net loss, you can use the formula: Net Loss = Total Expenses - Total Revenue. A net loss indicates that the company has incurred a financial loss during the specified period, which can have implications for its financial health and future operations.