20250607081850-Profit_Before_Taxation

Profit Before Taxation

From bib. source

The operating profit less the interest charges is referred to as the profit before taxation (PBT).

In other words, profit before taxation, or PBT, is equal to operating profit minus interest charges (Kind 1999, 29). Meanwhile, “[p]rofit before taxation less taxation is equal, of course, to the profit after taxation¨ (Ibid). That is, PBT, or profit before taxation, minus taxation is profit after taxation, or PAT (Ibid).

Profit before taxation is operating profit minus interest charges

Take $P_x$ to mean pre-taxation profit, $P_o$ to mean operating profit, and $C_i$ to mean interest charge:

$$P_x=P_o-C_i$$

Profit after taxation is PBT minus taxation

Take $P_y$ to mean post-taxation profit, $P_x$ to mean pre-taxation profit, and $T$ to mean taxes:

$$P_y=P_x-T$$

The profit before and after taxation are calculated in the profit and loss account.

profit_before_taxation profit_after_taxation PBT PAT profit_and_loss_account profit_and_loss_statement finance accounting mathematics mathematical_operator mathematical_operators binary_operators binary_operator subtraction subtraction_operator subtraction_operators formula formulae formulas math

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bibliography

• “The Profit and Loss Account in More Detail.” In Accounting and Finance for Managers, 25–37. The Fast Track MBA Series. Dover, NH: PriceWaterhouseCoopers, 1999.