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In corporate finance, net operating profit after tax (NOPAT) is a company's after-tax operating profit for all investors, including shareholders and debt holders.[1] It is equivalent to earnings before interest after taxes (EBIAT) and equal to NOPLAT and is defined as follows:[2]

NOPAT = Operating profit x (1 - Tax Rate)

An alternative formula is as follows[3]

NOPAT = Net Profit After Tax + after tax Interest Expense – after tax Interest Income

For companies with no debt and thus no interest expense, NOPAT is equal to net profit. In other words, NOPAT represents the company's operating profit that would accrue to shareholders (after taxes) if the company had no debt.[2]

Another fully equivalent expression is

NOPAT = AdjEBIT - CashOpTax


  • AdjEBIT represents adjusted earnings before interest and taxes (adjusted EBIT)
  • CashOpTax represents cash operating taxes.


NOPAT = (1-Tax Rate)* EBIT

NOPAT is frequently used in calculations of Economic value added and Free cash flow.[1][2]

Numerical example[edit]

Financing approach[edit]

Net income 500
- Interest income after taxes 50
Total profit after tax 450

+ Interest expense after taxes


See also[edit]


  1. ^ a b NOPAT
  2. ^ a b c NOPAT
  3. ^ Calculate NOPAT

External sources[edit]

  • G. Benett Stewart III (1991). The Quest for Value. HarperCollins.