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Effective Tax Rate

The average rate a business is taxed on its pre-tax earnings.

Effective Tax Rate = Tax Charges / Taxable Income

Example: In 2004, Journal Communications (JRN) had pre-tax earnings of $130.9 million and tax charges of $52.3 million. Journal Communications’ effective tax rate was 40%.

Posted by Geoff Gannon on February 7, 2006 02:05 PM |

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