Reviewed by Aug 27, 2020| Updated on
Meaning of "Red"
Red is a symbol of business in relation to a negative balance on the financial statements of a company. The phrase "in the red" is commonly used to refer to firms who were not profitable during their last cycle of accounting. The concept is derived from the ink colour used by accountants on the financial statements of a company to reach a negative number.
Meaning of "Red Ink"
Red ink is a jargon used for defining financial loss. The red ink is used to display a negative amount as accountants make actual entries into a financial ledger.
Black ink is used to mean a number is either positive or profitable. Red ink is synonymous with the industry expressions: red or in-the-ground ink bleeding. Whereas, hearing a healthy business identify it as in black, is normal.
What Does the Word "Red" Mean in the Financial World?
Red as a colour is often used to suggest that something unexpected is happening in the company. In this sense, the colour is often used outside a company's balance sheet. Regulations affecting companies, for example, are also considered red tape. Investors may also point to a security situation where the money is lost as being in the red.
Today, most financial and operating ledgers are kept electronically; the use of red and black colouring to highlight results is not unusual for apps.
When the books of an agency were kept, manually or by hand, red (and black) ink were useful methods of drawing attention to those variables that lost revenue, and those that added value.
The idea behind Black Friday is common to most people: the day after the Thanksgiving holiday, where stores massively discount products to attract shoppers. This Friday is called Black Friday because it marks a turning point where many retailers that worked "in-the-red" see their business turn to profit (black) on a Black Friday due to heavy sales. This leads to the holiday season.