The financial ratio pretax margin is a measure of the operating efficiency of a company. Pretax margin only requires two inputs from the income statement: revenues and income before taxes.
Pretax Margin (%) = (Income Before Taxes / Revenues) x 100
Also known as pretax profit margin, pretax margin is a ratio of pretax profits (income before taxes) to revenues. As such, higher pretax margins are desirable and indicative of management's ability to keep operating costs low. Since pretax profit includes the cost of goods sold, operating expenses, as well as interest expense, this measure also takes into account the company's use of leverage (debt).
Investors and analysts typically evaluate a company's pretax margin over time, looking for an increase in the measure. When drawing conclusions about the relative performance of a company, benchmark comparisons should be made with competitors in the same industry.
Company A's income statement indicates income before taxes of $6,031,000 and total revenues of $29,611,000. The pretax profit margin for Company A would be:
= ($6,031,000 / $29,611,000) x 100
= 0.2037 x 100, or 20.37%
income statement, revenues, leverage, profit margin
Explore Investing Further
Trading has never been easier, thanks to the rise of online platforms that enable you to buy and sell various assets at the click of a button. But with so many options available, it can be challenging to decide which platform is right for you.
Looking for a way to avoid swap fees while trading forex?
Below listed are the small reviews of the top 10 ETF brokers available across the United States.
Our top beginner's pick for copy trading is eToro. Read on for more details, plus seven good alternatives.
Swing trading stocks can be a great way for investors to take advantage of short-term stock market movements and gain significant returns. If you're interested in swing trading, the key to success lies in selecting the right stocks to buy and sell quickly for a profit.
The table below lists the best stock picks under $2, listed on public exchanges.
The table below lists the best stock picks under $1, listed both on public and OTC exchanges.
This section will highlight the best EV-trading penny stocks available in the United States.
The demand for sustainable energy has grown rapidly in recent years. This has resulted in increased scrutiny of the automotive market. As a result, the electric vehicle (EV) industry has made significant advancements.
Intelligent Bio Solutions Inc. is a life sciences company, founded in 2016 with headquarters in New York and is engaged in performing diagnostic tests, real-time monitoring, and non-invasive surgery for its patients. The firm has developed a CoV-2 Biosensor, which can be used in RNA virus detection.
Hour Loop was founded in 2013 with headquarters in Redmond, Washington. It’s an online retailer involved in e-commerce in the United States that hit the public markets on Jan 7th of 2022. The company sells home/garden decor, electronic products, kitchenware, and apparel through walmart.com, amazon.com, and hourloop.com.
.jpg)
