An after-tax profit margin is a financial performance ratio calculated by dividing net income by net sales. A company's after-tax profit margin is significant because it shows how well a company controls its costs.
Pretax profit margin only requires two pieces of information from the income statement: revenues and income before taxes.
The percentage ratio is calculated by deducting all expenses except for taxes, found in the income before taxes figure, dividing it by sales and then multiplying the resulting number by 100.
The Pretax Margin Ratio, also knows at the Earnings Before Tax (EBT) ratio, is an operating profitability ratio used by market analysts and investors. This ratio is useful in analyzing the standalone profitability of a company's operations, as it excludes tax expense.
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