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EAT (PAT) is the total profit/loss after tax from continuing operations, OR more often the total profit/loss after tax (i.e. including the profit/loss from discontinued operations).   It is therefore EBT with income tax or possibly also profit/loss from discontinued operations. Continuing or


EAC's is total profit/loss after tax, after allocation to statutory reserve and dividend payments to the owners of preferred shares. (18) EAC = Earnings Available for Common stockholders

Reconciliation of Operating income, EBITDA, EBIT (PBIT), EBT (PBT), EAT (PAT), Net income and EAC to IFRS

At the outset, it is necessary to mention that the below stated reconciliation is neither official nor binding and some terms are in fact not fully comparable (e.g. Operating income and EBIT/EBITDA). Although the profit forms mentioned below are very favourite, they mostly

Fixed budget

Fixed budget is a budget that is not flexed with the changed production/sales volume or other significant variable.  The variances between budget and actual are therefore usually great. But in practice, fixed budgets are used more widely than flexible budgets.   Fixed budget is useful ma

Static budget

Term static budget refers to budget that is not updated, either in terms of rolling of periods (months) and the changed conditions and circumstances. It is therefore both an opposite of rolling budget or synonym to flexible budget.   Static budget is useful mainly when the budget serves as

Bottom-up budgeting / Participative budgeting

If this style of budgeting is used, budgets are prepared from bottom-up, i.e. operating staff collects the detailed information from various departments/functions/other sources. Process usually has a budget coordinator – e.g. controller who aggregates/consolidates these lower-level budgets int

Net income

Net income is the total profit/loss (that is, including net profit/loss from discontinued operations), sometimes shown after deduction of profit/loss attributable to non-controlling interest (minority interest).


There are many definitions of NOPAT, therefore the use of this indicator is quite misleading. Common definition is: profit/loss on ordinary activities after taxation without taxed interest expense (i.e.  interest expense is adjusted for the effect of tax savings resulting from the interest exp

Operational plan

Operational plan is short-term (for a few months to approx. 3 years, typically for just 1 year) prepared by lower level management that focus on specific parts of the entity, e.g. on production or sales. Operational plans are based on more general strategic (corporate) plan and work it out into bigg

Flexible budget

Flexible budget is a budget that changes with the changed production/sales volume or other significant variable.  Budgeted sales/revenues and variable costs are therefore flexed with the actual activity level, but fixed costs usually remain unchanged. Flexible budget shows how the financial pla

Top-down budgeting / Imposed budgeting

If this style of budgeting is used, budgets are prepared from top-down direction, i.e. senior management sets the high-level budget (often just basic numbers) without collecting detailed information from operating staff. This total general target is then broken down into detailed budget. The proces

Negotiated budgeting

Negotiated budgeting is a budgeting style which combines top-down and bottom-up budgeting approaches. Negotiated budgeting can start by setting the general figures by top management. But compared to top-down budgeting, operational managers are given an opportunity to negotiate these figures. But it

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