What is Profit (before tax and after tax) ?
Profit is amount of difference between cost of goods sold and net sales and in financial term known as gross profit , now profit covers many parts as below
Operating Profit
It represents profit from operations simply considering the cost of goods sold and operating expenses . It refers to profit generated by the normal and recurring business activities of the firm , topics which did not cover are non-operating gains or losses , interest expenses and taxes .
Other income
Core business operations generate operating profit whereas other income represents it extra-ordinary income and non-operating income in regular . Profit or loss from investment and expense on voluntary retirement and these all cover extra- ordinary income .
Profit before interest and taxes
Profit before interest and tax refers to earning before interest and taxes , is the operating profit of the firm plus any non-operating surplus less non-operating loss . It is the measure before considering interest expenses and tax burden .
Profit after interest and taxes
It simply refers to amount remained after subtraction of income tax provision from profit before tax . it is also called the net profit or net income or bottom line , when profit after tax is positive company is referred black , when negative - red , Profit before tax is a measure of the change in the owners equity from revenues arising from revenues of accounting period .
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