Net Operating Profit After Tax

(redirected from NOPAT)
Also found in: Acronyms, Wikipedia.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
[H.sub.1]: Net Operating Profit after Tax (NOPAT) is superior to Economic Value Added (EVA) in explaining the change in Market Value Added (MVA).
The NOPAT estimates in the residual period should imply sustainable values of RONIC and profit margins, while the forecast revenue should equal the average over the company's business cycle.
Net operating profit after taxes (NOPAT) is determined as earnings before interest and taxes (EBIT) less taxes.
The increase in sales revenue and profitability, coupled with the lowering of tax payments and cost of goods sold due to ERM shall impact the NOPAT component of the enterprise's EVA in a positive manner.
His results showed that EVA had a better relationship with stock return than traditional tools (EPS, DPS, and NOPAT) for the period of 1997-2002, for the main board company listed in Bursa Malaysia.
He has analysed the performance of the company with the help of EVA MVA Net Operating Profit After Tax (NOPAT) Profit After Tax (PAT) Market capitalization and Earning Per Share (EPS).
The key principle of EVA is to subtract from the Net Operating Profits after Tax (NOPAT) all debt and equity charge, thus providing shareholders with a threshold for a minimum level of operating profits.