Pre-Tax Operating Income
- The difference between a business's revenue and any direct expenses tied to that revenue. The revenue used when determining pre-tax operating income (PTOI) must be from the company's primary business operations (no capital gains or 'other income'), and the direct expenses used must not include taxes or expenses unrelated to the company's primary business operations (no capital losses or 'other expenses'). Pre-tax operating income can be used by investors to determine the health of a business because it excludes financial gains and losses that occur outside of a business's general operations.
Related Terms and Acronyms
- Gross Profit Margin — Definition,
- The difference between the sales your business generates and the costs you pay out for goods.
- Long Term Capital Gain (LTCG) — Acronym,
- Your loss from the sale of a capital asset that you held for more than 12 months.
- Long-term Capital Loss — Definition,
- Your profit from the sale of a capital asset that you held for more than 12 months.
- Operating Cash Flow (OCF) — Acronym,
- The money a company generates from its business operations. This revenue excludes costs from certain investments.
- Short Tax Year — Definition,
- A tax period less than 12 months long, resulting from a business start-up or the transition to a tax year ending on a different date.