FULL FORM OF PBT

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WHAT IS PBT

          PBT Stand for Profit before Tax. It includes all of the company's profit before tax such as operating,non operating,continuing operation and non continuing operations. Profit before tax exists because tax expenses is constantly changing. PBT gives an investor to good idea of changes in a company's profit or earnings from year to year.

CALCULATION OF PBT AND ITS IMPORTANCE 

         Profit before tax includes all income earned regardless of the source. It includes sales,commission,service revenue and interest. PBT may be calculated by taking the net income of an organisation and adding the corporate income tax.
        PBT hold it importance in providing internal management and external users of financial data with a company's operating performance. PBT minimise one additional variable that may hold different indicators that influence the way financial data read. It can be understand with the following example  ----
       One company may get substantial tax benefits which will positively influence the net income of that company while the another company did not get the substantial tax benefit. So there will be difference in profit margin after tax of both companies. PBT helps to assess the company performance irrespective of tax differences. PBT is a performance measurement that emphasizes the general operations of a business. It is most useful in assessing the same industry. 

 
     

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