This is Part 4 of a Series. Go to Part 3: The Cost of Borrowing and Its Impact Against Corporate Profitability
As of this stage, we have arrived at After Interest
Business Profitability (or as expressed mathematically, EBT/Operating Assets).
This profitability metric, in conjunction with Non-core Business Profitability,
would now be more appropriate to be subjected to the Burden of Taxation. To review:
EBT / Operating Assets = After Interest Business
Profitability
Other Income / Non-core Business Investments = Non-core
Business Profitability
Non-core Business Profitability captures profitability
that is outside the company's core business operations. It has something to do with
investment income earned (e.g. interest income, capital gains, dividends, etc.)
from real estate, stock, bonds, or other money market investment instruments.
We combine both After Interest Business Profitability and Non-core Business
Profitability as follows: