Business Study Words

What’s “in the red”? What’s “in the black”? And how do you use them?

Are you in the black or are you running in the red? What does those things mean? Well, that's what we will talk about here.

This is part of our on going “study word” series of articles. You can see our other articles on caveat and STEM by clicking on the links provided.

In the red – (idiom) a term used to describe a financial loss or negative sales numbers.

[\ˈin thə ˈred\]

In the black – (idiom) a term used to describe a financial gain or positive sales numbers

[\ˈin thə ˈblak]

In the red and in the black are terms used to talk about sales numbers. You will often see these when talking about stocks or about budges in companies or large organizations. If you are in the black, you are doing well; you are making profit. If you are in the red, however, you are losing money.

While it is a bit unclear where these words come from and why we use those colors, the term first appeared in 1907 in Montgomery Rollins’  Money and Investment: a reference book for the use of those desiring information in the handling of money or the investment therefor 

And yes. That is the actual title. 

Another possible reason why black and red are used comes from investopedia.com, which explains:

Red as a color is often used in business to indicate that something unwanted is happening. The color also is used in this context outside of a firm’s balance sheet. For example, regulations governing businesses are often referred to as red tape. Investors may also refer to a security position losing money as being in the red.

“Red tape” will be discussed in more detail in a future article, but the idea here is that red is used as a warning. Hence, describing something as “red” in business is used to indicate potential danger or points to worry about.

You can see several examples of “in the red” and “in the black” below. The first is an example used for a chart from a Bloomberg News, discussing Toshiba’s financial troubles: 

Screen Shot 2017-04-27 at 10.35.38 AM

 

As you can see, things are not looking good for Toshiba at the moment.

However, things are looking very different for Jive Software, a communication and collaboration solutions company. According to The Oregonian, Jive Software is “painting it black” with it’s first quarter of profits as a public company, “posting net income of $915,000 – 1 cent per share”. Here, “paint it black” means they are doing extremely well, and making a major profit this past quarter.

You might see these terms, which have similar meanings to “in the red” and “in the black”:
In the hole – (adj.) the act of being in debt or owing money to another person or organization 
to run a deficit
– (v.) to continue having greater expenses over income
red ink
– 
(n.) a colloquial term used to describe a lose of money or value
black ink – (n.) a colloquial term used to describe a gain of money or value
red tape
– (adj.) a term used to describe unnecessary governmental or bureaucratic regulations.

 

 

2 comments

Leave a Reply