After-Tax Profit Margin

Loading the player...

What is 'After-Tax Profit Margin'

After-tax profit margin is a financial performance ratio, calculated by dividing net income after taxes by net sales. A company's after-tax profit margin is important because it tells investors the percentage of money a company actually earns per dollar of sales. This ratio is interpreted in the same way as profit margin - the after-tax profit margin is simply more stringent because it takes taxes into account.

After-Tax Profit Margin

BREAKING DOWN 'After-Tax Profit Margin'

Often, a company's earnings don't tell the entire story. The amount of profit can increase, but that doesn't mean the company's profit margin is improving. For example, a company's sales could increase, but if costs also rise, that leads to a lower profit margin than what the company had when it had lower profits. This is an indication that the company needs to better control its costs.

RELATED TERMS
  1. After-Tax Return On Sales

    A profitability measure that indicates how well a company uses ...
  2. Profit Margin

    Profit margin is part of a category of profitability ratios calculated ...
  3. After-Tax Return On Assets

    A profitability measure that indicates how well a company uses ...
  4. Net Profit Margin

    Net Margin is the ratio of net profits to revenues for a company ...
  5. After-Tax Return

    The return on an investment including all income received and ...
  6. Marginal Profit

    Marginal profit is the profit earned by a firm or individual ...
Related Articles
  1. Markets

    A Look At Corporate Profit Margins

    Take a deeper look at a company's profitability with the help of profit margin ratios.
  2. Professionals

    The Income Statement: Key Ratios - Profit and Operating Margin

    FINRA/NASAA Series 65 - The Income Statement: Key Ratios - Profit and Operating Margin. In this section key ratios: profit margin, operating margin, interest coverage ratio, price earning ratio ...
  3. Professionals

    Goals Of Financial Management

    Find out the goals that all businesses have in common.
  4. Term

    The Difference Between Gross and Net Profit Margin

    To calculate gross profit margin, subtract the cost of goods sold from a company’s revenue; then divide by revenue.
  5. Professionals

    Operating Profitability Ratios

    CFA Level 1 - Operating Profitability Ratios. Operating profitability looks at two forms of ratios. This section covers the return on sales measurements, such as EBITA and profit margin.
  6. Markets

    Profitability Indicator Ratios: Profit Margin Analysis

    By Richard Loth (Contact | Biography)In the income statement, there are four levels of profit or profit margins - gross profit, operating profit, pretax profit and net profit. The term "margin" ...
  7. Entrepreneurship

    What’s a Good Profit Margin for a New Business?

    Surprisingly, the younger your company is, the better its numbers may look.
  8. Economics

    What is Net Margin?

    The ratio of net profits to revenues for a company that shows how much of each dollar earned by the company is translated into profits.
  9. Active Trading

    Value Investing: Finding Value In Income Statements

    A company's income statement basically tells you how much money it has taken in and how much it has paid out over a year or a quarter. Looking at the annual income statement rather than a ...
  10. Options & Futures

    Margin Trading: Conclusion

    Here's the bottom line on margin trading: You are more likely to lose lots of money (or make lots of money) when you invest on margin. Now let's recap other key points in this tutorial: ...
RELATED FAQS
  1. Should I look at a company's operating profit or net profit?

    Explore the ways in which investors and market analysts use a company's operating profit and net profit margins for equity ... Read Answer >>
  2. What is the difference between gross profit margin and net profit margin?

    Understand the difference between the two profitability measures, gross profit margin and net profit margin, and how to calculate ... Read Answer >>
  3. What is the difference between gross margin and profit margin?

    Understand the difference between gross margin and profit margin, and learn about the profitability ratios used in evaluating ... Read Answer >>
  4. What's the difference between profit margin and operating margin?

    Find out the differences between a company's gross profit margin, net profit margin and operating margin, and what each metric ... Read Answer >>
  5. What are some examples of factors that will affect my profit margin?

    Dive into profit margin, and discover some of the many factors that can influence the profit margin for your company in a ... Read Answer >>
  6. What is the difference between operating margin and profit margin?

    Understand the difference between operating margin and profit margin in relation to evaluating a company's profitability ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center