• Profit After Tax

    Profit After Tax is the total amount that a business earns after all tax deductions have taken place. It is used as a barometer to determine how much a business really earns and how much it can utilise for it’s day to day activities. Profit after tax is also seen as a measure of a company’s profitability after all its expenses have been deducted and can be fully utilised by the company to conduct its business. Shareholders are also paid dividends from this amount.

    Union Budget 2018

    After-Tax Profit Margin:

    The After-Tax Profit Margin is a financial performance ratio wherein the percentage of a company’s revenue is calculated after all operating expenses, interest, taxes and stock dividends have been deducted from the company’s total revenue.

    How is After-Tax Profit Margin Calculated?

    After-Tax Profit Margin can be calculated by using the following formula:

    (Total Revenue – Total Expenses)/Total Revenue = Net Profit

    Net Profit/Total Revenue = After Tax Profit Margin  

    Features of After-Tax Profit Margin:

    The main features of After-Tax Profit Margin are as follows:

    • It is one of the most important financial concepts
    • It is a measure of how competent a company is with regards to converting its revenue into profits
    • It is used in the process of margin analysis, which is used to compare companies within the same industry
    • It helps investors determine how much a company actually earns
    • It can help determine whether a company needs to control its costs
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