Quick Summary
PAT represents the bottom-line profit available to shareholders after all costs, interest, and taxes.
Profit After Tax (PAT), also known as Net Profit or Net Income, is the final profit remaining with a company after deducting all operating expenses, interest, and taxes from total revenue.
PAT Formula
PAT = Revenue - All Expenses - Interest - Taxes
Or
PAT = PBT - Tax
Example
If a company has:
- Revenue: ₹100 lakhs
- Total Expenses: ₹75 lakhs
- Interest: ₹5 lakhs
- Tax @25%: ₹5 lakhs
Then PAT = ₹100 - ₹75 - ₹5 - ₹5 = ₹15 lakhs
Importance of PAT
- Available for distribution to shareholders
- Can be retained for growth or paid as dividends
- Key metric for EPS calculation
- Used in profitability ratios
Key Points
- Also called Net Profit or Bottom Line
- Profit available to shareholders
- Used to calculate EPS
- Can be distributed or retained
- Most comprehensive profit measure