Tax Burden Ratio

Calculate the tax burden ratio, which is the ratio of a company’s net income to its income before tax, indicating how much of a company’s income is retained after taxes.

The tax burden ratio measures the portion of a company’s earnings that is paid as taxes. A higher ratio indicates that a larger portion of the income is being retained by the company after taxes. This ratio provides insights into the tax efficiency of the company and its ability to manage its tax liabilities.

The formula is as follows:

Also known as: tax efficiency ratio.

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Calculate the Tax Burden Ratio in Python

The Tax Burden Ratio is available in the Ratios module of the open-source Finance Toolkit. Install it with:

pip install financetoolkit -U

Then call get_tax_burden_ratio as shown below.

from financetoolkit import Toolkit

toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")

tax_burden_ratios = toolkit.ratios.get_tax_burden_ratio()

Which returns:

Parameters

get_tax_burden_ratio accepts the following parameters:

• rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
• growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
• lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
• standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
• trailing (int): Defines whether to select a trailing period. E.g. when selecting 4 with quarterly data, the TTM is calculated.

Related Profitability Ratios

The Ratios module page introduces the module, and the sidebar lists all of its functions.