Tax

In corporate finance, tax refers to the mandatory financial charges imposed by governments on businesses' income or profits. Companies must calculate their taxable income, apply the relevant tax rates, and pay the owed amount to local, state, or federal authorities. Taxes affect a company's profitability and cash flow, influencing decisions on investments, pricing, and growth strategies. Proper tax planning is crucial for optimizing financial outcomes and ensuring compliance. Ultimately, managing tax obligations helps companies retain more earnings for reinvestment and growth.