Quarterly tax surprise rate
factor.formula
Calculate the unexpected change rate of taxes and expenses for this quarter, where the numerator is the difference between the income tax expense for this quarter and the income tax expense for the same period last year, and the denominator is the absolute value of the income tax expense for the same period last year.
The formula measures the degree of unexpected changes in tax expenses relative to historical levels by calculating the difference between the income tax expense of the current quarter and the income tax expense of the same period last year and dividing it by the absolute value of the income tax expense in the same period last year.
- :
Income tax expense for the quarter
- :
Income tax expense in the same period last year
factor.explanation
This factor is based on the unexpected information that may be contained in tax expenses. Changes in tax expenses may reflect real changes in a company's profitability, which may not yet be fully reflected in the stock price. When tax expenses in the current quarter are higher than expected (compared to the same period last year), it may indicate strong profitability for the company; conversely, it may indicate weak profitability. In theory, changes in tax expenses are positively correlated with future earnings because tax expenses usually lag behind actual changes in profitability. This factor can be viewed as a measure of the quality of a company's earnings and can be used to capture deviations in the market's expectations of a company's profitability.