Legal Definitions - net loss

Definition: Net loss refers to the amount by which a company's expenses exceed its revenues in a given period. It is also known as a net operating loss.

For example, if a company has $100,000 in revenue and $120,000 in expenses in a year, it would have a net loss of $20,000.

Another example could be a startup company that is investing heavily in research and development, marketing, and other expenses to grow its business. In the early stages, it may have a net loss as it is not generating enough revenue to cover its expenses.

The examples illustrate that a net loss occurs when a company's expenses exceed its revenues. This can happen for various reasons, such as high operating costs, low sales, or investments in growth. A net loss is an important metric for businesses as it indicates the financial health of the company and its ability to generate profits in the future.