What is a pre-tax profit figure?

The pre-tax profit figure shows a company’s profit after operating costs and interest on debts has been paid, but before taxes have been deducted.

As taxes are continually fluctuating, the pre-tax profit figure provides the company’s operating profit for financial reporting and comparison.

Where have you heard about pre-tax profit figure?

The pre-tax profit figure is shown on company income statements and is often reported in the financial news as an indicator of the company’s performance.

What you need to know about pre-tax profit figure.

The pre-tax profit figure is calculated by deducting all expenses, except for taxes, from the total income. Or, adding corporate income tax to the net income. This is shown on the third line from the bottom of a company’s income statement.

Financial analysts use pre-tax profit figures to compare companies’ operating performances. These companies may pay different levels of taxation, so using pre-tax profits gives a clearer view of actual performance.

Find out more about pre-tax profit figure.

Learn more about operating profit and how corporate income tax affects companies.