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5) Profit After Tax (PAT):... 12/13 Definition: Profit After Tax (PAT) is the net profit of a company after deducting all expenses, including taxes, from its total revenue. It represents the amount of profit available to the company's shareholders after all expenses have been paid. Calculation: · PAT = PBT - Taxes Example Calculation for Crunchy Corner (Ramesh's Business): · PBT (Profit Before Tax) = Rs 25,000 · Taxes Paid = Rs 10,000 · PAT = PBT - Taxes = Rs 25,000 - Rs 10,000 = Rs 15,000 Interpretation: - Crunchy Corner's Profit After Tax (PAT) is Rs 15,000. This represents the net profit available to the company after deducting all expenses, including taxes, from its total revenue. It reflects the amount of profit that can be distributed to shareholders or reinvested into the business. PAT Margin % Calculation: · PAT Margin % = (PAT / Total Sales) *100 = (15,000 / 90,000) *100 = 16.67% Interpretation: - Crunchy Corner's Profit After Tax (PAT) Margin is 16.67%. This indicates the percentage of total sales revenue that translates into net profit after deducting all expenses and taxes. So we have breakdown of the income statement line items, along with the explanations and calculations provided, offer a clear understanding of how revenue, expenses, and profitability are assessed in a business. This foundational knowledge will be valuable for comprehending more complex financial analyses and decision-making processes in the future.