NOPAT financial definition of NOPAT. NOPAT finance term by the Free Online Dictionary.

Net Operating Profit After Tax

A company's operating profit after subtracting its tax liability. It is calculated as follows:

NOPAT = Operating Profit * (1 - tax rate)

Because operating profit does not deduct interest expenses, NOPAT shows what a company's net profit would have been if it were debt free. As such, it may provide a more accurate description of a company's efficiency of operations for highly leveraged companies.

Net Operating Profit after Tax (NOPAT)

What Does Net Operating Profit after Tax (NOPAT) Mean?

A company's potential cash earnings if its capitalization were unleveraged (that is, if it had no debt). NOPAT is used frequently in economic value added (EVA) calculations. It is calculated as follows:

NOPAT = Operating Income × (1 - Tax Rate)

Investopedia explains Net Operating Profit after Tax (NOPAT) NOPAT constitutes a more accurate look at operating efficiency for leveraged companies. It does not include the tax savings many companies get because they have existing debt.

Related Terms:
• Accrual Accounting
• Balance Sheet
• Diluted Earnings per Share
• Operating Expense
• Profit

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After Tax Operating Income Economic Value Added Shareholder Value Added	It can be described by one of the three equivalent formulas: EVA = NOPAT - Cost of capital x (Capital employed) or EVA = Rate of return - Cost of capital x (capital employed) or EVA = (ROI - WACC) Capital employed with Rate of return = NOPAT/Capital, where Capital = Total balance sheet - non-interest bearing debt at the beginning of the year. Real options valuation within information uncertainty: some ... by Bellalah, Mondher; Bouri, A.; Levyne, O. / International Journal of Business If the changes in NOPAT exceed this benchmark, then the initiative creates economic value for the manufacturer. Evaluating internal operations and supply chain performance using EVA ... by Pohlen, Terrance L.; Coleman, B. Jay / SAM Advanced Management Journal The formula is: EVA = (rate of return cost of capital) x economic capital = (r- c)x ec = rec- cec = NOPAT - Capital charge Where NOPAT = Net Operating Profit After Tax Advocates claim that use of the EVA measure helps managers make better decisions by motivating them (through compensation schemes tied to the metric) to focus their efforts on value creating activities. The pursuit of value: EVA in Canada--an uncertain legacy by Armitage, Howard M.; Wong, Ellen; Douglas, Alan / CMA Management	Nonqualifying Stock Option Nonrated Nonrated Bonds Nonrecourse Nonrecourse Debt nonrecourse loan Nonrecurring Charge Nonredeemable Nonrefundable Nonrefundable Credit Nonreproducible Asset Nonreproducible Assets Nonresident Alien Nonsmoker Nonsterilized Intervention Nonsystematic Risk Nontaxable Distributions Nontaxable Dividends Nontaxable Earned Income Nontaxable Exchange Nontaxable Income Nontradables nontraded REIT Nonviolation Nullification of Benefits Nonvoting Stock NOPAT Nordic Council Nordic Investment Bank NOREX Norges Bank Norio Ohga Normal annuity form Normal Backwardation Theory Normal Deviate Normal Distribution Normal Growth Firm Normal Growth Firms Normal Investment Practice Normal Market Size Normal Portfolio Normal probability distribution Normal Random Variable Normal Retirement normal trading unit normal wear and tear Normal Yield Curve Normal-Course Issuer Bid Normalized Earnings Normalizing method Normas de auditoria Normas eticas	Nootkas Nootkas NOOTO Nootropes Nootropic Nootropic Nootropic agents Nootropic Drug Nootropic Drugs Nootropics Nootropil NOOTW NOOUG NOOW NOP NOP Nopa NOPAC NOPAD Nopaging nopal nopal Nopalea Nopalea Nopalea Nopales Nopales Nopalry NOPAR NOPARH NOPAT NOPB NOPBC NOPBT NOPC NOPCA NOPCAN NOPCAS NOPCC NOPCRN NOPD nope nope nope nope nope NOPEC Noped Noped NOPES NOPES NOPEX NOPF NOPG Noph Nopheros Nopheros NOPHG NOPHN NOPHN NOPHNRCSE

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After Tax Operating Income
Economic Value Added
Shareholder Value Added

It can be described by one of the three equivalent formulas: EVA = NOPAT - Cost of capital x (Capital employed) or EVA = Rate of return - Cost of capital x (capital employed) or EVA = (ROI - WACC) Capital employed with Rate of return = NOPAT/Capital, where Capital = Total balance sheet - non-interest bearing debt at the beginning of the year.

Real options valuation within information uncertainty: some ... by Bellalah, Mondher; Bouri, A.; Levyne, O. / International Journal of Business

If the changes in NOPAT exceed this benchmark, then the initiative creates economic value for the manufacturer.

Evaluating internal operations and supply chain performance using EVA ... by Pohlen, Terrance L.; Coleman, B. Jay / SAM Advanced Management Journal

The formula is: EVA = (rate of return cost of capital) x economic capital = (r- c)x ec = rec- cec = NOPAT - Capital charge Where NOPAT = Net Operating Profit After Tax Advocates claim that use of the EVA measure helps managers make better decisions by motivating them (through compensation schemes tied to the metric) to focus their efforts on value creating activities.

The pursuit of value: EVA in Canada--an uncertain legacy by Armitage, Howard M.; Wong, Ellen; Douglas, Alan / CMA Management

Nonqualifying Stock Option

Nonreproducible Asset