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