馃攳
Net Loss (Formula, Example) | How to Calculate Net Loss? - YouTube
Channel: WallStreetMojo
[10]
hello everyone the channel wallstreet mojo watch the video till the end and
[16]
also if you are new to this channel then
you can subscribe us by clicking the
[20]
bell ican today we have a topic with us as
net loss there's net profit and always
[25]
the businessman do not want to hear this
term called loss loss is such a word you
[31]
know that embarks all their veins and
the blood starts moving like anything so
[37]
net loss no every company doesn't want
it to be there on their financial
[43]
statements that is on the profit and
loss account so let's start what is the
[51]
net loss
[55]
see if a business incurs expense in
excess of the revenues on in specific
[63]
time period the loss incurred as a
result is known as the net loss in the
[67]
accounting balance if the revenue that
is are if that is in excess of the
[73]
expenses it would result in net profit
okay if this is less then net loss token
[87]
5 see loss of net profit is usually
recorded at the bottom of the income
[93]
statement no business can survive
despite entering this net losses by
[99]
realigning by relying completely on the
revenues on during the earlier period of
[104]
with the help of the loans but it does
not get does not goes without saying
[109]
that the purpose of the business is to
turn the profits eventually so let me
[117]
give you an explanation to the net loss
fine let's begin see it or it is also
[126]
considered as an example of the matching
principle okay as revenues on in a
[133]
period and the expenses made against it
are matched for that period irrespective
[137]
of when those expenses might actually be
paid if some of the expenses incurred in
[141]
a specific period are not paid within
that time period it is called as the
[144]
food expenses so let's understand
understanding the total expenses well
[158]
the total expenses can further be broken
down into cost of goods sold and then we
[165]
have the operating expenses okay of all
kinds which are necessary to keep the
[172]
business in operation so COGS is the
basic figure which must be covered in
[179]
the revenue and if for some reason
including increased cost of production
[183]
manufacturing issues expensive
equipments or the factors revenue might
[187]
be exceeded by the cost of goods sold so
thus it results in loss assuming the CO
[193]
GS is covered by the revenues there can
always be some unexpected a rise in the
[202]
expenses that can be possible so all of
these factors can add to total expenses
[214]
and should be exceeded should exceed the
revenue the net loss might result for
[218]
some specific period also so now let's
say that what are the causes or impacts
[226]
of such net losses see although this is
not unusual for the business to suffer
[233]
losses continuing losses would result in
lowered accrued earnings and could
[243]
necessary stream measure to cut down on
operational or other expenses which
[247]
could include reducing the manpower or
shutting down some of the manufacturing
[253]
units or downgrading part of the
operations none of which would do well
[257]
in terms of creating a positive image
for the corporations in their consumer
[262]
or investors but still at times such
drastic measures can help to tide over
[267]
the particular difficulty is period
before a business can generate profits
[271]
again
so along with this reasons revenue can
[275]
also fall below the expenses and cost of
goods sold due to a strong competition
[286]
you know or ill-conceived
pricing strategies apart from the
[293]
unsuccessful approach to marketing the
products or service offered so
[297]
successful marketing programs are often
considered as the you know the best
[301]
methodology or the best method for
boosting sales and image of the business
[309]
so resulting in the net income and which
should also be used for accrued earnings
[315]
for the future quarter and the support
business operations in case you know if
[319]
there is net losses due to some
unfortunate reasons okay now let's get
[327]
to head to head off for the case of the
examples of the net loss company
[331]
let's say ABC less there is a company
ABC that is that might earn or revenue
[341]
closely around 1,50,000 you know
specific period and the COGS is 1,00,000
[350]
while expenses mount up to let's say
60,000 against the revenue earned so
[357]
formula for calculating the net loss is
the total revenue minus total all
[360]
expenses revenue minus all the expenses
10,000 is the loss as simple as that so
[368]
we are left with the negative cash of
10,000 after deducting the CEO GS in the
[372]
expenses from the total revenue earned
for that period so in other words
[376]
company ABC registered a loss of 10,000
for the same period and would need to
[380]
rely on the accrued earnings
or additional resources to stay afloat
[386]
and carry on with the future operations
this happened due to the excess of
[393]
expenses which along with the COGS has
exceeded the total earnings of the seat
[399]
Period
now how net loss influences the taxable
[412]
income well see it must also be
understood that losses might affect how
[417]
a company files its its taxes you do the
weight get altered of the taxable income
[422]
in a specific period but due to regional
differences due to regional differences
[431]
you know this might or this can happen
this is possible
[437]
and the taxable income might be brought
down and business could receive tax
[441]
refunds which would also help them to
keep their operations afloat so however
[448]
as as already stress continuing losses
would eat into the cash reserves and
[453]
business might rest shutting down its
operation so if it fails to turn things
[457]
around and to generate profit now
how the net loss is different from the
[467]
gross loss see net loss must also not be
confused with the cross loss which is
[472]
negative cash left after COGS is
deducted from the total revenue if the
[477]
result is positive
it would be termed as the gross profit
[484]
and if the result is negative it would
be termed as the gross loss for that
[489]
period so it is revenue minus the COGS
now where is the calculating the net
[500]
loss is one must deduct the COGS as
well for all the operating expenses from
[504]
the revenue earned in the period so
which is arrived at simply by deducting
[509]
the COGS from the revenue but still it
ends up with losses when expenses are
[514]
also taken away from the gross profit so
if a gross profit is registered then the
[518]
losses would also be higher it is
possible and the gross losses on the
[525]
same reason can be deducted expenses as
well so finally let me put my
[529]
conclusions on this see net losses is
not just another accounting term but an
[534]
important indicator of how well a
business is performing and is called at
[538]
the bottom line this is very important
net loss is called bottom line and the
[541]
revenue is called the top line uses term
in your practical life both practical
[547]
because it is mentioned at the bottom
line of the income statement also
[549]
figuratively because of the significance
in that no matter what odds a business
[554]
might be facing but if if it exceeds in
generating profit things are still
[559]
looking up and vice versa the case
so however it goes out without saying
[563]
that you know it must not be seen in the
isolation because number of times the
[567]
net losses are registered simply as a
result of some temp or transistor e
[573]
changes in the business operations of
production facility which might not be
[577]
considered as a cause of concern for the
future success of the business so it is
[580]
only when a continual losses are
occurring due to inefficient marketing
[586]
sub quality products very expensive
production along with the other issues
[589]
that the business must take necessary
action to turn things around to survive
[593]
and prosper so that's it for this
particular topic if you have learned and
[598]
enjoyed watching this video please like
and comment on this video and subscribe
[603]
to our channel for the latest updates
thank you everyone Cheers
Most Recent Videos:
You can go back to the homepage right here: Homepage