GCAP General Education Midterm Practice Exam 2025 - Free General Education Practice Questions and Study Guide

The bottom line on an income statement refers to net income, which is the total profit of a company after all expenses, taxes, and costs have been deducted from total revenue. This figure reflects the company's financial performance over a specific period and is crucial for assessing profitability. Investors and stakeholders often focus on net income because it provides a clear picture of a company's ability to generate profit and is a key indicator of its overall financial health.

In contrast, gross margin represents the revenue left after deducting the cost of goods sold, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) measures a company's operating performance without considering non-operating expenses, and net sales account for total revenue adjusted for returns and allowances. While these figures are important in their own right, net income is the ultimate measure used to evaluate a company's profitability and effectiveness in managing its expenditures against its revenues.