Net Operating Profit After Tax - NOPAT

AAA

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.

RELATED TERMS
  1. Economic Value Added - EVA

    A measure of a company's financial performance based on the residual ...
  2. After Tax Operating Income - ATOI

    A company's total operating income after taxes. This non-GAAP ...
  3. Shareholder Value Added - SVA

    A value-based performance measure of a company's worth to shareholders. ...
  4. Value-Added Tax - VAT

    A type of consumption tax that is placed on a product whenever ...
  5. Social Enterprise

    An organization that is directly involved in the sale of goods ...
  6. Corporate Credit Rating

    The opinion of an independent agency regarding the likelihood ...
Related Articles
  1. What is the difference between economic ...
    Investing

    What is the difference between economic ...

  2. Understanding Economic Value Added
    Markets

    Understanding Economic Value Added

  3. Advertising, Crocodiles And Moats
    Professionals

    Advertising, Crocodiles And Moats

  4. Overseas Cash Hoards: Shareholder Boon ...
    Investing

    Overseas Cash Hoards: Shareholder Boon ...

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center