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Net Earnings + Income Tax
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Pretax Margin =
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Net Sales
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Explanation of Pretax Margin:
The Pretax Margin measures how well a company can generate before-tax profits
at the current level of sales.
Importance of Pretax Margin:
As with any margin, a high or increasing Pretax Margin is usually a positive
sign, showing the company is able to keep its operations costs low, while being
able to pull in strong earnings. The Pretax Margin varies greatly between
industries, so you will have to compare the results for the company you are
analyzing to industry averages.
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