Net Operating Profit After Tax

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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.