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What is Profit Before Tax: Calculation, Advantages & Disadvantages

What is Profit before tax?

How to Calculate Profit Before Tax?

So, the total cost of running a business before paying tax is ₹2,000 crores.

Therefore, the calculation of profit before tax is as follows:

Particulars

Amount

Total revenue

₹3,000 crores

Total expenditure

₹2,000 crores

Profit before tax (₹3,000-₹2,000) crores

₹1,000 crores

So, the pre-tax return on sales is 26.67%. This implies that Rai Services Pvt. Ltd. is generating earnings before tax of Rs. 26.67 for each ₹100 of its overall revenue.

Pre-tax returns is the total surplus revenue generated over incurring non-operating and operating expenditures, except tax expenses. It is evaluated by dividing EBT by the total revenue generated by a company.

What Are the Advantages of Profit Before Tax?

What Are the Disadvantages of Profit Before Tax?

Frequently Asked Questions