loss

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Loss

The opposite of gain.

Loss

Extracting less money from a transaction than one put into it. For example, a business' expenses may be $1 million for a year but it may only take in $800,000 in revenue. In such a case, the business has suffered a $200,000 loss. This is not always bad; most businesses lose money in the first few years of operation and this can reduce their tax liability when they do make a profit. However, losses over an extended period of time ultimately result in failure. See also: Gain, Paper Loss, Loss Carryforward, Loss Carryback.

loss

The deficiency of the amount received as opposed to the amount invested in a transaction. Compare gain. See also net loss.

loss

the shortfall between a firm's sales revenues received from the sale of its products and the total costs incurred in producing the firm's output (see BREAK-EVEN ANALYSIS). Losses may be of a temporary nature occasioned by, for example, a downturn in demand (see BUSINESS CYCLE) or due to an exceptional level of expenditures (such as the launch of a series of new products). Short-term losses are usually financed by a firm running down its RESERVES or by an increase in borrowings. Losses which are sustained over time typically arise from a firm's poor competitive position in a market (see COMPETITIVE ADVANTAGE), and unless competitiveness can be restored market exit or DIVESTMENT may be the only practical way of remedying the situation. See MARKET SYSTEM.

loss

the difference that arises when a firm's TOTAL REVENUES are less than TOTAL COSTS. In the SHORT RUN, where firms’ total revenues are insufficient to cover VARIABLE COSTS, then they will exit from the market unless they perceive this situation as being temporary. In these circumstances, where firms’ total revenues are sufficient to cover variable costs and make some CONTRIBUTION towards FIXED COSTS, then they will continue to produce despite overall losses. In the LONG RUN, however, unless firms’ revenues are sufficient to cover both variable and fixed costs, then their overall losses will cause them to exit from the market. See MARKET EXIT, LOSS MINIMIZATION, PROFIT-AND-LOSS ACCOUNT.
References in periodicals archive ?
In three of the past 12 months, the excess spread has not been sufficient to cover the monthly losses incurred.
Product liability losses do not include losses incurred under warranty theories, nor do they include amounts paid for insurance against product liability risks.
As discussed above, excess spread from Group 2 is available to offset losses incurred in Group 1 after Group 2 losses have been accounted for.
In two of the past 6 months, the excess spread has not been sufficient to cover the monthly losses incurred.
June's distribution was the first month where excess spread was not sufficient to cover the monthly losses incurred.
Allstate, a property and casualty insurance company, had claimed a deduction for losses incurred in its insurance business in 1969.
Best anticipates a modest profit after tax of approximately EUR 250,000 (USD 296,000) in 2005 factoring losses incurred from the January 2005 U.
These affirmations, downgrades, and removals from Rating Watch Negative are due to a decline in credit enhancement as a result of losses incurred from the Delphi Corporation credit event.
Chuck Coppa, GreenMan's Chief Financial Officer stated, "Due to the magnitude of the operating losses incurred by our Georgia subsidiary, management adopted a plan in September 2005 to dispose of all Georgia operating assets.
Jupiter allocates a majority of its funds to this investment, and during 2005 the company partially reduced it as a result of capital requirements to cover large losses incurred.
3 million of municipal bonds at a gain of approximately $286,000, which will partially offset the losses incurred on the MBS.