Net Operating Loss (NOL)

Net Operating Loss (NOL)

A net operating loss occurs when a company’s revenues are less than its allowable deductions hence producing a negative tax liability. In the US, the NOL in a given year can be used as a tax credit (carried in the accounts as deferred tax assets) to offset tax bills in future profitable years. Prudent management would suggest companies use up DTAs quickly as their present value erodes over time.

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