Investing and Money Glossary, terms and definitions.

Pre-Tax Margin

The latest 12 months' pre-tax income divided by the latest 12 months' sales. A good measure of profitability, although it's important to bear in mind what industry a company is in. Supermarket chains have low pre-tax margins and depend on volume, so there is no point comparing a grocery chain to an upscale specialty retailer, which will have higher margins.