Hello Financial pals! ๐ Let's unravel the mystery behind "Profit After Tax" (PAT) and its even cooler sibling, PAT excluding those extra-ordinary items, all in the cozy embrace of Screener Docs!
Formula: $$ PAT = \text{Net Income - Taxes} $$
So, in simple terms, it's the sweet cash your company pockets after paying off all the tax dues.
Scenario: Imagine we're hanging out with "EcoChic Furnishings." Over the last 12 months, they had a Net Income of $3 million and paid $1 million in taxes.
$$ PAT = 3,000,000 - 1,000,000 = 2,000,000 $$
So, EcoChic's Profit After Tax is $2 million.
Now, if there were some one-time lightning-strike profits or losses, we'd exclude those for an even clearer picture!
Parameters:
- Net Income: The total earnings your company makes.
- Taxes: The unavoidable slice Uncle Sam takes.
Things to Remember:
- Holistic Picture: PAT gives you a snapshot of overall profitability.
- Exclusion Rules: Removing one-time items helps you see the normal ebb and flow.
- Comparative Analysis: Compare PAT over different periods for trends and insights.
Best and Worst Values:
- Best Value: A consistently growing and positive PAT means the financial ship is sailing smoothly.
- Worst Value: Negative values or wild fluctuations could be a red flag. Consistency and positivity are your financial buddies.