What Does ‘in the Black’ Mean?

If you’re just entering the job market, you might come across the term “in the black” and you might not exactly understand what it means. This term has nothing to do with being fashionably dressed, but relates to the financial success of a company. Put simply, being “in the black” is when a company is profitable.

Profits are generally measured in certain ways. The simplest measure is known as ‘net income’ which is calculated by subtracting expenses from income. To be “in the black,” a company’s net income should be positive. This means that any income that it has earned is greater than the expenses that it has spent. In other words, the company has made a ‘net profit’.

Businesses that are operating “in the black” are able to keep their operations going and potentially expand, as they are able to pay off debt or reinvest back into their business. Companies that are operating “in the red” are usually struggling and have incurred losses. Without corrective measures and improvements, businesses operating “in the red” have a higher chance of failing.

In modern business, being “in the black” is an important prerequisite to making successful investments and growing your company. Without this positive financial position, it can be difficult to make the necessary investments or upgrades. To keep your business in the black, it is important that you are consistently keeping track of your expenses and revenue. This will help ensure that you are able to remain profitable and grow your business in the future.