The result of a business operation where expenditures exceed receipts. Business losses may arise internally, through failure to produce enough of anything the market will buy to cover production expenses, or externally, through failure of others to pay bills due, or to repay debts. The effect of losses is to reduce a business’s capital. If losses proceed so far that the total assets of a business become less than its liabilities, the business becomes insolvent, and should be either closed or rescued by a fresh injection of capital. See also capital loss; deadweight loss; triangle of loss.
|Reference: Oxford Press Dictonary of Economics, 5th edt.|