Definition
Profit After Tax (PAT)
Profit After Tax is a company's net profit remaining after all expenses, interest and taxes have been deducted, the bottom line of the income statement.
PAT, or net profit, is what flows to shareholders and feeds earnings per share. It is the residual after operating costs, depreciation, interest and tax, including any exceptional items, so it can be lumpy when one-offs occur.
Indian companies report PAT on both standalone and consolidated bases. Analysts often look past headline PAT to adjusted or normalised profit, stripping out exceptional gains and losses, to judge the sustainable earning power that underpins valuation.
Related terms
- Profit and Loss StatementThe profit and loss statement, or income statement, reports a company's revenues, expenses and resulting profit or loss over a period.
- Net MarginNet margin, or net profit margin, is profit after tax as a percentage of revenue, showing how much of each rupee of sales becomes bottom-line profit.
- Earnings Per Share (EPS) - Basic vs DilutedBasic EPS divides profit by the existing number of shares, while diluted EPS also counts shares that could be created from options, warrants and convertibles.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.