Profit before tax

Profit after every cost, including interest and exceptional items, but before the tax charge. In an Indian statement of profit and loss it is the line just above tax expense, and it is the base the effective tax rate is measured against.

A company with ₹960 crore of operating profit, ₹140 crore of finance costs and ₹60 crore of other income reports ₹880 crore of profit before tax. A tax charge of ₹220 crore leaves ₹660 crore of profit after tax, an effective rate of 25.0%.

Pre-tax profit is the fairer figure for comparing companies whose tax positions differ for reasons unrelated to the business, such as a tax holiday on one plant or losses carried forward from a bad year. Check what's inside it first. Schedule III shows profit before exceptional items and tax as its own line, and the gap between that line and profit before tax is the year's exceptional charge or gain.

Find the exceptional line before comparing.