Net Operating Profit After Tax - NOPAT

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DEFINITION of 'Net Operating Profit After Tax - NOPAT'

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

Calculated as:

NOPAT = Operating Income x (1 - Tax Rate)

INVESTOPEDIA EXPLAINS 'Net Operating Profit After Tax - NOPAT'

NOPAT is 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.

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