Profit After Tax

Finance

Quick Definition

Profit After Tax (PAT) is the net profit a company earns after deducting all expenses, including taxes, from total revenue.

Detailed Explanation

PAT represents the final earnings of a company, also known as net profit or bottom line. It is the amount available to shareholders for dividends or reinvestment.

PAT is a key indicator of a company’s overall profitability and financial health.

Formula

👉 PAT = Profit Before Tax (PBT) – Taxes

PAT vs Other Profit Measures

  • PAT: Final profit after tax
  • PBT: Profit before tax
  • EBIT: Earnings before interest and tax

Why PAT Matters

  • Shows actual profitability
  • Determines dividend distribution
  • Important for investors and analysts

Key Insight

  • Higher PAT = Better financial performance

Example

"If a company has PBT of ₹5 lakh and pays ₹1 lakh as tax: 👉 PAT = ₹4 lakh"

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