Net Operating Loss

In finance, the term “net operating loss” is used in reference to a financial loss made when the costs of earning revenues exceed the revenues earned.

A net operating loss may occur when a business invests heavily in new customer acquisition over a given period, resulting in an outlay of money greater than the revenues collected during that period.

It may also occur when the cost of acquiring or servicing customer relationships is higher than the revenue generated through those relationships.

When a public company makes a net operating loss, the value of its shares may decrease.

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