CompanyGraph
Use to find companies where this pattern is active.
Two observations describe the retention path: net income as a share of pretax income shows a near-zero effective tax rate, and net income as a share of EBIT shows that interest and tax together consume little of operating profit.
State
Earnings retained with little tax or interest drag
Emergence
Two retention measures align: net income is close to pretax income (near-zero effective tax), and net income is most of EBIT (the combined interest-and-tax bite from operating profit is small). Together they describe earnings that flow through to the bottom line with unusually little drag.
Limits
This interpretation identifies a retention configuration, not tax strategy quality or sustainability. It does not predict future tax rates, assess whether tax positions are aggressive, or indicate regulatory risk. Near-zero tax can come from jurisdiction mix, loss carryforwards, credits, or one-time items, and can end abruptly when those run out or rules change.
Screen for Minimal Tax and Interest Drag
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Explanation
Each observation is an independent reading of how much of the company's profit survives to the bottom line: Net Income as Share of Pretax Income records the most recent annual ratio of net income to pretax income — equivalently, one minus the effective tax rate. A firing reading means the effective tax rate is near 5% or below, with pretax income positive. Net Income as Share of EBIT records how much of operating profit survives everything between EBIT and the bottom line — interest expense and taxes combined. A firing reading means roughly 85% or more of EBIT reaches net income, with EBIT positive. When both fire, the configuration is a company whose reported earnings carry unusually little tax and financing drag. The observations record the current ratios only; they say nothing about why the drag is low or whether it stays low.
Interpretation
This interpretation identifies retention characteristics, not tax strategy quality. It does not predict future rates, assess regulatory risk, or indicate whether positions are sustainable. Retention profiles can shift due to law changes, jurisdictional mix, expiring carryforwards, or business evolution.
Required Observations
Tax Efficiency
Net income retains nearly all of pretax income (near-zero effective tax rate).
Tax Retention Ratio
Net income is at least ~85% of EBIT — minimal combined interest and tax drag.