Profit after Tax

by Manshu on March 14, 2008

in Articles

PAT or the profit after tax is the profit that is available to the shareholders after paying the corporate tax and all other expenses.

From the company’s total revenues operating expenses like employee remuneration and administrative expenditure is deducted to arrive at Operating profit. From operating profit, finance charges are deducted like Interest or Depreciation, and this amount is profit before tax.

The taxes that have to be paid are deducted from profit after tax and the resultant amount is known as profit after taxes.

Usually the only expense that is deducted from profit after tax is the profit that has accrued due to changes in the accounting policies of the company. This is because profits which, have occurred due to changes in accounting policy would have already been factored in the earlier years in which they were originally made and hence tax paid on them.

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