Pre-tax Earnings

The Enemizer, maker of digestive aids, prints on its quarterly report $100M of revenues and $20M in operating profits. They will owe about $6M in taxes, but their pre-tax earnings are $20M.

Essentially, pre-tax earnings are operating profits. So why delineate? Like...why even think about a pre-tax number? Because taxes change from year to year or at least era to era. Different companies have different capital structures, some with tons of cash (and interest income), some with tons of debt (and big time interest payments). And companies do one-off events, like acquire things that have big write-offs or net operating losses with them, which cloud the real earnings power of a company.

So looking at pre-tax earnings, along with after-tax, gives a kind of dual-lens view into the company's health. They're the earnings sans tax, sans Ireland freebie (Apple saves billions a year in tax costs by being incorporated in Ireland), sans grief.

See: Operating Income.