An effective tax rate needs the right profit denominator #Shorts

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Revenue is the wrong denominator for this income tax ratio. In our hypothetical example, revenue is one hundred million dollars. Profit before tax is ten million dollars, and income tax expense is two million dollars. Tax expense divided by profit before tax gives twenty percent. Dividing that same tax expense by revenue gives two percent. Those are…

Use this analysis as general education. Confirm current prices and conditions independently, define invalidation before entry, and size every position for the loss you can actually tolerate.