Pre-Tax Income

Pre-Tax Income refers to the amount of money a company earns before accounting for income tax expenses. It is calculated by taking the total revenue generated by the company and subtracting all operating expenses, interest, and any other non-operating costs, but not taxes.

This figure is crucial for assessing a company’s profitability and financial performance, as it shows how much income the business has generated before the impact of taxation. For example, if a company has total revenue of $1,000,000 and incurs $700,000 in expenses, its Pre-Tax Income would be $300,000. This amount is then subject to taxation, which will reduce the net income that the company ultimately retains.