What does the phrase “above the line mean”?
In the phrase “above the line”, the line is generally referring to gross profit. Therefore, any costs or expenses that are above the line refer to costs incurred to make the product or provide a service.
Any costs “below the line” would be operating expenses, or those costs that are not directly incurred to produce the product or provide the service.
So in the example below, cost of goods sold of $400 would be above the line, while operating expenses and non-operating items would be “below the line.
It’s important to note that this phrase can vary depending on business type or by company. Its a very subjective phrase that does not have a specific formula or definition. Therefore, the phrase “above the line” could even refer to all items included in operating income.
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