why is profit before tax useful 
pbt is not typically a key performance indicator on the income statement these are usually focused on gross profit operating profit and net profit however like interest the isolation of a company s tax payments can be an interesting and important metric for cost efficiency management the pre tax profit also determines the amount of tax a company will pay any credits would be taken from the tax obligation rather than deducted from the pre tax profit further excluding the tax provides managers and stakeholders with another measure for which to analyze margins a pbt margin will be higher than the net income margin because tax is not included the difference in pbt margin vs net margin will depend on the amount of taxes paid also excluding income tax isolates one variable that may have a substantial impact for a variety of reasons for instance c corps pay a federal tax rate of 21 however different industries may receive certain tax breaks often in the form of credits which can influence the tax impact overall renewable energy is one example wind solar and other renewables can be subject to an investment tax credit and a production tax credit 3 thus comparing the pbt of companies when renewables are involved can help to provide a more reasonable assessment of profitability 