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Pre tax profit on sales

• Also known as Profit Margin; Profitability. Calculated by dividing the Pre-tax Income by Net Sales: (Net Income / (1 - Tax Rate)) /Revenues.
This measures the effectiveness of management in controlling expenses and is a useful measure of overall operational efficiency when compared with prior periods or other companies in the same business. This return on sales varies widely between industries (e.g. 2% return for supermarkets is reasonable, but manufacturing industries should return 4-5%). A declining profit margin can be caused by declining sales, declining efficiency, aging plant and equipment, or inappropriate management decisions. If quarterly pre-tax income is not available, you can estimate the tax rate from the yearly tax rate.

 
 

Follow this link for all the terms related to tax.

 
 Embedded terms in definition
 Aging
Efficiency
Expenses
G
Income
Margin
Net income
Net sales
Net
Profit margin
Profitability
Profit
Return
Sales
 
 Related Terms
 
Ad valorem tax
Add on rate
After tax
After tax proceeds from sale of old asset
After tax profit margin
After tax real rate of return
Alternative minimum tax
Average pre tax profit margin
Average profit margin
Average tax rate
Before tax
Before tax profit margin
Book profit
Break even analysis cost volume profit analysis
Break even tax rate
Buy on close
Buy on margin
Buy on opening
Cash on delivery or c.o.d. cod transaction
Conditional sales contracts
Contingent deferred sales charge
Corporate tax view
Days' sales in inventory ratio
Days' sales outstanding
Depreciation tax shield
Domestic international sales corporation
Double tax agreement
Due on sale
Earned on equity
Excess return on the market portfolio
Expected return on investment
Foreign sales corporation
Foreign tax credit
Free on board
General agreement on tariffs and trade gatt
Gross profit margin
Imputation tax system
Interest equalization tax
Interest impact on accumulation of 1 per period
Interest impact on instalment to amortize or amortization
Interest impact on present value of ordinary annuity of 1 per period
Interest impact on sinking fund factor
Interest on interest
Interest rate on debt
Interest tax shield
Investment tax credit
Limitation on asset dispositions
Limitation on liens
Limitation on merger, consolidation, or sale
Limitation on sale and leaseback
Limitation on subsidiary borrowing
Limited tax general obligation bond
Margin of profit ratio
Marginal tax rate
Market on close
Market on opening
Membership or a seat on the exchange
Mortgage tax
Net profit
Net profit margin
Net sales
On balance volume
On line trading
On the run
On the runs
Operating profit
Operating profit margin
Operating profit ratio
Options on physicals
Paper profit
Percent of sales method
Personal tax view of capital structure
Pre existing condition
Pre refunded
Pre sale order
Pre tax income
Pre trade benchmarks
Price to sales ratio
Profit
Profit and loss statement
Profit margin
Profit sharing plan
Progressive tax system
Quarterly sales
Regressive tax
Return on assets
Return on equity
Return on investment
Return on total assets
Revenue or sales
Rights on
Sales
Sales charge
Sales forecast
Sales type lease
Sell on close
Sell on opening
Short term tax exempts
Signaling view on dividend policy
Split rate tax system
Tabs tax anticipation bills
Tans tax anticipation notes
Tax anticipation bills
Tax anticipation note
Tax basis
Tax books
Tax breaks
Tax clawback agreement
Tax deferral
Tax deferral option
Tax deferred
Tax deferred retirement plans
Tax differential view of dividend policy
Tax efficient portfolios
Tax exempt
Tax exempt sector
Tax free acquisition
Tax haven
Tax reform act of 1986
Tax shield
Tax swap
Tax timing option
Trade on top of
Two tier tax system
Value added tax
Withholding tax

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