Profit Before Tax
What is Profit Before Tax?
Profit before tax measures a company's operating and non-operating profits before taxes are considered. It is the same as earnings before taxes.
Profit Before Tax Example
Simplifying things a bit, revenue minus expenses equals earnings. The resulting figure is usually listed on a company's income statement right before taxes are listed. For example, take a look at the income statement for Company XYZ:
In this example, profit before tax is $150,000 while net income is $100,000.
Why Profit Before Tax Matters
Profit before tax provides investment analysts with useful information for evaluating a company's operating performance without regard to tax implications. By removing the tax factor, profit before tax helps to minimize a variable that may be unique from company to company, in order to focus the analysis on operating profitability as a singular measure of performance. Such analysis is particularly important when comparing similar companies across a single industry.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.