Loss, in financial terms, refers to a negative financial result where the total expenses incurred by a company exceed the total revenue generated during a specific period. It represents a decrease in the company’s net worth or equity.
Loss is calculated by subtracting the total revenue from the total expenses. The formula for calculating a loss is as follows:
Loss = Total Expenses – Total Revenue
If the total expenses are greater than the total revenue, the company incurs a loss. Losses can occur due to various reasons, such as low sales, high operating expenses, non-recurring expenses, or unexpected events impacting the business.