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. It is equivalent to earnings before interest after taxes (EBIAT) and equal to NOPLAT and is defined as follows:
An alternative formula is as follows
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.
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
|+ Interest income after taxes||50|
|Total profit after tax||550|
|- Interest expense after taxes||100|
- G. Benett Stewart III (1991). The Quest for Value. HarperCollins.
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