FRA

kartikpuri141018
Posts: 1
Joined: Mon Sep 12, 2016 6:52 am

FRA

Postby kartikpuri141018 » Wed Dec 14, 2016 6:44 am

I need interpretation on tax burden ratio .

edupristine
Finance Junkie
Posts: 791
Joined: Wed Apr 09, 2014 6:28 am

Re: FRA

Postby edupristine » Thu Dec 15, 2016 6:25 am

Hi Kartik

Tax Burden Ratio = Net Income/Earnings Before Taxes

Net Income is measured after taxes. So if taxes are zero the tax burden equals one and so the lower this number, the higher the tax burden.
Similarly, if Interest Expense is zero then interest burden ratio equals one and therefore the higher the financial leverage, the lower is this number.


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