PATMI

PATMI 

Profit after tax and minority interest plays a crucial role in finance. It functions as a critical indicator of a company’s financial performance. Stakeholders are given a clearer picture of the company’s profitability by analysing the net income produced after taxes and accounting for minority interests. This essential data makes it easier to assess the company’s capacity to turn a profit, pay dividends, and make the necessary expenditures for expansion in the future.  

What is PATMI? 

A financial indicator called profit after tax and minority interests, or PATMI, is used to evaluate a company’s profitability. After taxes and the share of the minority interests in the subsidiary or joint venture have been considered, PATMI is the net profit attributable to the company’s shareholders. It indicates financial performance and displays the earnings produced by the company’s core businesses. PATMI is frequently used in financial analysis and reporting to assess a company’s profitability and viability since it sheds light on its profit capacity. 

Understanding PATMI 

Profit after tax is a business’s net income after all relevant taxes have been subtracted from its revenue. It indicates the profit left over for the company’s shareholders after paying taxes. The net income that belongs to the company’s shareholders (after taxes) and is attributable to non-controlling minority shareholders in subsidiaries or related entities is profit after tax and minority interest. It aids in comprehending how profits are distributed among different stakeholders in a company’s financial statements. 

 Analysts and investors typically use this statistic to analyse a company’s financial performance and compare it to other companies in a similar industry.  

 There are two components of PATMI. The first is the profit-after-tax component of PATMI, which is the amount of money that a company earns after paying all of its taxes. It considers the company’s income, expenses, and taxes levied by the government. This metric is important because it clearly shows how much money a company is earning after accounting for all of its expenses.  

 The second is the minority interests’ component; PATMI is the portion of profits that belong to minority shareholders. These shareholders own less than 50% of the company’s shares but still hold some ownership. This component is crucial because it reflects the share of profits that belong to minority shareholders, which can be significant in some cases.  

 Understanding Profit After Tax and Minority Interests (PATMI) is essential for investors and analysts who want to accurately evaluate a company’s financial performance. It offers a thorough analysis of a business’s profitability by accounting for taxes and minority interests, which can be critical in making informed investment decisions. 

Formula of PATMI 

The formula for calculating PATMI is as follows: 

 PATMI = net profit – tax expense – minority interest 

Where, 

  • Net profit = The total profit earned by the company before accounting for taxes and minority interests. 
  • Tax expense = The amount of taxes the company makes on its earnings. 
  • Minority interest = The portion of the subsidiary or joint venture’s profit attributable to minority shareholders. 

How to calculate PATMI? 

The following steps should be followed to calculate PATMI: 

  • The income statement of the company will contain the net profit amount. The company’s overall profit is before taxes and minority interests are considered. 
  • Calculate the company’s period-to-period tax expense. The income statement or financial statements often include this information. 
  • Determine the percentage of profits attributable to minority shareholders in subsidiaries or joint ventures. The financial statements typically include this information, especially in the consolidated statement of profit or loss. 
  • Subtract the minority interest and tax expense from the net earnings. The resulting number represents PATMIs. 

Example of PATMI 

Consider the following example to understand the calculation of PATMI. Let’s say ABC Corporation announces a net profit of US$1,000,000. The subsidiary’s profit is split into a US$60,000 minority interest and a US$300,000 tax expense for the period. 

 To calculate PATMI, subtract the tax expense and minority interest from the net profit: 

 PATMI = Net profit – Tax expense – Minority interest = US$1,000,000 – US$300,000 – US$60,000 = US$640,000 

 The profit available to the company’s shareholders after taxes and accounting for the minority shareholders’ part of the subsidiary’s profit is US$640,000 the PATMI for ABC corporation. 

Frequently Asked Questions

Minority interest, in valuation, is the fraction of equity attributable to non-controlling shareholders and refers to the ownership stake in a company held by persons or entities that do not have control or a majority ownership position. 

Determine the percentage of a subsidiary’s equity that non-controlling shareholders own, then multiply that percentage by the subsidiary’s net income or equity value to calculate the minority interest. 

 

Minority interest, which indicates the ownership stake held by non-controlling shareholders in the firm’s subsidiaries or affiliates, is often regarded as a part of a corporation’s net worth or equity. 

 

The following are the benefits of a minority interest in a business: 

  • Diversification of investment assets is made possible by holding a minority interest in a company. It lowers total investment risk by exposing diverse businesses, markets, and industries. 
  • Minority shareholders can nevertheless reap the company’s progress and profitability rewards. If the business does well, they may profit from their investment through dividends or capital gains. 
  • Minority shareholders occasionally may have specialised knowledge or experience in a particular industry. They can give their expertise to the company and possibly help its operations by owning a minority interest. 
  • A potential escape option is made possible by holding minority ownership. Minority shareholders may choose to sell their shares at a profit if the company attracts more investors or grows significantly. 
  • Minority shareholders often have minimal responsibility to protect their assets if the firm encounters legal or financial difficulties. 
  • Minority shareholders may not hold the majority of the shares. The power to vote and representation on the board of directors, which gives them a voice in critical decision-making processes, are some of the rights and influence they may still possess. 

A 1% minority interest denotes a person’s or organisation’s 1% ownership stake in a business, typically as a non-controlling stakeholder.  

    Read the Latest Market Journal

    Weekly Updates 15/4/24 – 19/4/24

    Published on Apr 15, 2024 30 

    This weekly update is designed to help you stay informed and relate economic and company...

    From $50 to $100: Unveiling the Impact of Inflation

    Published on Apr 12, 2024 111 

    In recent years, inflation has become a hot topic, evoking strong emotions as the cost...

    Japan’s Economic Resurgence: Unveiling the Tailwinds Behind Nikkei 225’s Record Leap

    Published on Apr 11, 2024 71 

    Source: eSignal, Intercontinental Exchange, Inc. In the heart of Japan’s economic landscape, the Nikkei 225...

    Weekly Updates 8/4/24 – 12/4/24

    Published on Apr 8, 2024 103 

      This weekly update is designed to help you stay informed and relate economic and...

    What Makes Forex Trading Attractive?

    Published on Apr 2, 2024 183 

    In a world where the click of a button can send goods across oceans and...

    Weekly Updates 1/4/24 – 5/4/24

    Published on Apr 1, 2024 97 

    This weekly update is designed to help you stay informed and relate economic and company...

    How to soar higher with Positive Carry!

    Published on Mar 28, 2024 133 

    As US Fed interest rates are predicted to rise 6 times this year, it’s best...

    Why 2024 Offers A Small Window of Opportunity and How to Position Yourself to Capture It

    Published on Mar 28, 2024 183 

    With the Federal Reserve (FED) finally indicating rate cuts in 2024, we witnessed a significant...

    Contact us to Open an Account

    Need Assistance? Share your Details and we’ll get back to you

    IMPORTANT INFORMATION

    This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

    An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

    Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

    Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

    The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

    The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

    The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

    This advertisement has not been reviewed by the Monetary Authority of Singapore.  

     

    Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
    250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
    Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com