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What is EAT (Earnings after Taxes)
Earnings after Taxes, abbreviated as EAT. It is a term that refers to financial result for an accounting period. It is already after taxation and it is available for distribution between the owners and the company.

Earnings after Taxes, abbreviated as EAT. It refers to financial result for an accounting period. It is already after taxation and it is available for distribution between the owners and the company. Another term is the NI (Net Income), which is the total profit less the tax paid.

Calculation: EAT = financial statement for an accounting period

What is the net profit EAT in practice?

It gives a quick look to investors, banks or suppliers at the financial condition of the company - as profit, along with the amount of revenues and the share of equity creates the first impression on how the business conditions are. Conversely it is not suitable for evaluation of operation activities, because it is not cleansed from non-cash depreciation and amortization ( ‘eg. Depreciation) and extraordinary accounting operations (eg. Sale of assets).

For the calculation of net profit is used accounting profit. It is therefore an accounting number that is entered in the financial and tax statements. We can say that connects the income statement and the balance sheet. Net profit, therefore, typically in accordance with current legislation divides the reserve fund, other funds, employees or shareholders of the company (a dividend). It can also remain undistributed. The method and form of distribution of the net profit is different in different states (and countries) and different types of companies. Net profit is also used as an indicator it uses for financial analysis when analyzing financial ratios, for example, is included in the calculation of EBIT, EBITDA, EBT.

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Last update: 15.11.2016

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