Profit before tax

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The profit before tax (also: profit before tax , pre-tax profit ; English: earnings before taxes , EBT ) is an economic indicator and corresponds to that of a company generated earnings before deduction of income tax - expense or the total income tax expense.

Reasons for determining profit before tax

The distinction between pre-tax and post-tax profit arises from the fact that company profit is usually subject to taxation . Since the taxation of profits can show considerable regional differences, it makes sense to compare the input tax profits when comparing companies. In addition, the tax expense can include extraordinary items, for example through the formation or reversal of deferred taxes for loss carryforwards or through additional tax claims or reductions after a tax audit , which make it difficult to compare the profit between different accounting periods .

calculation

Determination according to the German Commercial Code

In German commercial law, profit before tax is not an independent item in the profit and loss account , but results from Section 275 HGB as a subtotal before the item taxes on income and other taxes , before the annual surplus is determined: 

    Betriebsergebnis
    +/- Finanzergebnis
    = Gewinn vor Steuern
    - Steuern vom Einkommen und Ertrag
    - sonstige Steuern
    = Jahresüberschuss/Jahresfehlbetrag

If there are no additions or reductions according to § § 8 and § 9 GewStG , the profit before tax corresponds to the taxable trade income. If a tax progression is to be applied, the profit before tax influences the tax rate and thus the amount of profit-related taxes.

Determination according to international accounting regulations

With accounting according to IFRS , the profit before tax is as follows: 

    Gewinn vor Zinsen und Steuern (EBIT)
    +/- Finanzergebnis
    +/- Beteiligungsergebnis
    = Gewinn vor Steuern (EBT)
    - Ertragsteuern
    = Ergebnis aus fortgeführten Geschäftsbereichen
    +/- Ergebnis aus aufgegebenen Geschäftsbereichen
    = Periodenergebnis (EAT)

Derived key figures

For the reasons mentioned above, some key figures, such as the return on capital employed, are based on profit before tax instead of net income:

The profit before tax in relation to sales (gross return on sales ) also provides a tax-independent statement on the profitability of a company.

See also

Individual evidence

  1. ↑ Jörg Wöltje (Ed.), Reading, understanding, designing balance sheets , 2011, p. 336
  2. ↑ Norbert Zdrowomyslaw / Robert Kasch, company comparisons and benchmarking for management practice , 2002, p. 79