Quick Summary
PBT shows profitability before the impact of taxation, useful for comparing companies in different tax jurisdictions.
Profit Before Tax (PBT), also known as Earnings Before Tax (EBT), is the profit a company makes before paying income tax. It is calculated by deducting all operating expenses and interest from revenue.
PBT Formula
PBT = EBIT - Interest Expense
Or
PBT = Revenue - All Expenses (except tax)
Example
If a company has:
- EBIT: ₹20 lakhs
- Interest Expense: ₹3 lakhs
Then PBT = ₹20 - ₹3 = ₹17 lakhs
Uses of PBT
- Comparing profitability across tax jurisdictions
- Assessing operational efficiency before tax impact
- Calculating tax liability
- Financial forecasting
Key Points
- Also called Earnings Before Tax (EBT)
- Excludes tax expenses only
- Includes interest expenses
- Useful for international comparisons
- Starting point for tax calculation