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Pretax Earnings or Profits |
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Pretax earnings or profits Net income before federal income taxes are subtracted. Pretax Earnings or Profits A company's total revenue less its operating expenses, interest paid, and depreciation, but not taxes. For example, a widget manufacturer earns $1,000,000 in total revenue. The widgets cost $200,000 to make and his administrative and payroll expenses total $250,000. He also must subtract $50,000 in depreciation on his widget manufacturing equipment. His net income is stated as: $1,000,000 - $200,000 - $250,000 - $50,000 = $500,000. It is important to note, however, that this number does not include any taxes that the widget manufacturer must pay that year; this fact is what differentiates pretax earnings or profits from net income. Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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