Bottom line

Definition

The profit line at the bottom of an income statement, after every cost.

Why It Matters

It is the line a buyer trusts least in a small business, and for a good reason: the owner decides most of what sits above it. A salary, a spouse on payroll, a vehicle, travel and one-off legal work all pull it down without changing what the business produces, which is why SDE and EBITDA exist and why a broker quotes those instead. Read this line for the tax story and the add-backs for the earnings story, then ask which of those add-backs a new owner would really stop paying.

In numbers: A shop reporting $40,000 of bottom-line profit on $310,000 of SDE is not earning $40,000; the gap is the owner's pay and the add-backs, and every one has to be argued line by line.