What does a negative profit indicate for a firm?

A negative profit indicates that a firm's total costs exceed its total revenues, leading to a loss. This situation arises when the firm's expenses, such as operating costs, wages, and materials, are higher than the income generated from sales. When a firm frequently experiences negative profits, it could signal underlying issues, such as high operational costs, ineffective pricing strategies, or decreased demand for its products.

In contrast, making a profit would imply that revenues are higher than costs, while breaking even means that costs and revenues are equal with no profits or losses. The idea of expanding suggests an increase in production or market presence, typically associated with positive financial performance rather than negative profits. Thus, a negative profit unmistakably points to a firm experiencing a loss.