Profit before taxes

Since different meanings are ascribed to both annual profit and invested capital in Eq. (9-25), it is important to define the terms precisely. The invested capital may refer to the original total capital investment, the depreciated investment, the average investment, the current value of the investment, or something else. The annual profit may refer to the net annual profit before tax A vp, the net annual profit after tax Awp, the annual cash income before tax Aci, or the annual cash income after tax A vcf... 

The total profits (before tax) over the life of a project are independent of the method used to value inventoiy. Over a project life of n years, Eq. (9-148) can be written as... 

However, the annual profit (before tax) does depend on the value of the inventoiy. Since the tax payable in any individual year is based on A vp, the net annual profit A v fp (after tax) is also dependent on the method chosen for valuing inventoiy. Frequently, a particular method for valuing inventoiy is chosen to delay payment of tax as long as it is legally possible to do so. 

As can be seen in Table 2 all revenues less expenses associated with selling are summed in Row 17. All expenses including noncash expenses such as depreciation, amortization, and depletion are summed in Row 30. The net profit before tax, Row 32, is obtained by subtracting Row 30 from Row 17 and making any inventory adjustment required. Row 34 is the cash taxes that are to be paid unless offset by investment or energy tax credits in Row 36. The deferred income tax is shown in Row 35. The deferred tax decreases the net profit after tax in the early years and increases the net profit after tax in later years. The impact on cash flow is just the other way around as discussed later. Row 37, profit after tax, is obtained as foliow s ... 

A 30% return on the investment before taxes means a profit before taxes =... 

One advantage to loans and bonds is that the interest paid can be deducted from profits before taxes are figured, whereas the dividend paid stockholders is an after-tax expense. In 1971 the income tax rate was 48% of all earnings. If the interest rate at that time was 10%, then after taxes it would equivalently be 5.2%. In other words, for each dollar spent on interest the profits would be reduced 1.00 and the... 

Times interest earned Profit before taxes plus interest charges/interest charges 7.0-8.0... 

Net operating margin Net operating profit before taxes/sales 10-15%... 

A concern has a total income of 1 million/year, and all expenses except depreciation amount to 600,000/year. At the start jjf the first year of the concern s operation, a composite account of all depreciable items shows a value of 850,000, and Ihe overall service life is estimated to be 20 years. The total salvage value at the end of the service life is estimated to be 50,000. Thirty percent of all profits before taxes must be paid out as income taxes. What would be the reduction in income-tax charges for the first year of operation if the sum-of-the-years-digits method were used for depreciation accounting instead of the straight-line method ... 

You are to prepare a complete preliminary-estimate design for a new plant for the solvent rendering of raw tissues by an extraction process. Some pieces of equipment are now on hand which we believe can be used in the new plant. Please submit a complete report on the design which you feel will be most favorable for our company. We are particularly interested in total investment, yearly profit before taxes, and the probable percent return on the investment. We shall be interested in the reason for your particular choice of solvent. The design report should also include the number of operators necessary and the approximate operating procedure. 

Profit from sales should rise more rapidly than costs (Figure 12-11). If all is well, the two become equal at some number of units sold (the breakeven point). With our figures this is at 170 million matchboxes per year. Above this value the firm will make a profit on matchboxes. The difference between sales and cost is the profit before tax. We must say that our figures look too good making boxes of matches is a mature industry, where profit margins are probably quite low. 

Cnoh = Standard overhead cost based on normal production rate, /h. ctjp = Actual net profit before tax, /unit. 

Net annual income before taxes Net annual profit before taxes Net annual cash flow before taxes Taxable income... 

One point of conflict is in the term "wide sales." The major factor limiting an instrument company s growth and profit potential is its development and engineering capacity. Within our own definitions, we aim to get 5 of profit before taxes for each instrument engineering dollar spent.. .. In general we cannot do a profitable business making instruments for only one company s needs, because the number would be too small to warrant the development expense, (p. 31A)... 

Profit before taxes = continuous cash flow - depreciation before taxes... 

The above background provides the motivation for the study and applications described in this chapter. Here, two types of process optimization problems are described. The first type has only economic objectives the two examples considered for this are the classical Williams and Otto (WO) process used recently by Pintaric and Kravanja (2006), and an industrial low-density polyethylene (LDPE) plant based on our recent studies (Agrawal et al., 2006 and 2007). The economic objectives tried are PBP, NPW, IRR, profit before taxes, and/or operating cost. The second type has both economic and environmental indices for this, the industrial ecosystem with four plants employed by Singh and Lou (2006) is expanded to an ecosystem with six plants and then optimized for multiple objectives. 

---