Profit After Tax (Pat)

The profit after tax pat is calculated by subtracting the total tax expense from the gross profit.

Formula:

Profit after tax PAT = Gross profit - Total tax expense

Explanation:

• Gross profit: The total revenue generated by the company after subtracting cost of goods sold.
• Total tax expense: The total amount of taxes paid to the government, including corporate income tax, sales tax, and other applicable taxes.
• Profit after tax PAT: The remaining profit after all taxes have been paid.

Additional notes:

• The tax rate used to calculate the tax expense should match the applicable rate for the company’s jurisdiction.
• The tax expense can include both current and deferred taxes.
• The profit after tax PAT is used to calculate other financial ratios, such as return on investment (ROI) and return on equity (ROE).

Example:

Gross profit = $100,000Tax rate = 20%Total tax expense = $20,000Profit after tax PAT = $100,000 - $20,000 = $80,000

Therefore, the profit after tax pat for the company is $80,000.