After-Tax Profit Margin

The profit margin for a product measures the amount of return the company gets for making that product. It's basically computed as after-tax profits in the numerator, and revenues in the denominator.

It is possible to compute this figure on both a before-tax and after-tax basis. The after-tax profit margin provides a real-life measure of what is going on. The company (usually) has to pay taxes, so the after-tax margin is a true look at how much the company is making on each product.

Often companies will calculate before-tax versions of their financial measures as well. These leave out the amount the company has paid in taxes. The goal is to produce an operational figure, giving a picture of how the business is running. This allows investors and the companies themselves to compare products in different tax environments, say, in different countries or even different states.