What is 'Net Operating Profit Less Adjusted Taxes - NOPLAT'

Net operating profit less adjusted taxes (NOPLAT) is a financial metric that calculates a firm's operating profits after adjusting for taxes. By using operating income, or income before taking interest payments into account, NOPLAT is a better indicator of operating efficiency than net income, for example. NOPLAT is used extensively in mergers and acquisitions because it enables the calculation of an investment's free cash flow.

BREAKING DOWN 'Net Operating Profit Less Adjusted Taxes - NOPLAT'

NOPLAT for a firm is calculated as Operating Income x (1 - Tax Rate). For example, a firm with $250,000 in operating income and a tax rate of 30% would have NOPLAT of $175,000. NOPLAT is also used to calculate Economic Value Added or EVA: a measure of management performance to compare economic profit to the total cost of capital.

RELATED TERMS
  1. Net Operating Profit After Tax ...

    A company's potential cash earnings if its capitalization were ...
  2. Operating Income

    The amount of profit realized from a business's operations after ...
  3. Operating Profit

    The profit earned from a firm's normal core business operations. ...
  4. Future Income Tax

    Income tax that is deferred because of discrepancies between ...
  5. Net Income - NI

    1. A company's total earnings (or profit). Net income is calculated ...
  6. Income From Operations - IFO

    The profit realized from a business' own operations. Income from ...
Related Articles
  1. Investing

    Gross, Operating and Net Profit Margins

    A company’s income statement includes the company’s gross, operating and net profits.
  2. Investing

    Net Operating Income

    Net operating income (NOI) reflects income after operating expenses are deducted, but before income taxes and interest are deducted.
  3. Investing

    Is Net Income The Same As Profit?

    Net income and profit both deal with positive cash flow, but there are important differences between the two concepts.
  4. Investing

    Understanding the Income Statement

    The best way to analyze a company—and figure out if it's worth investing in—is to know how to dissect its income statement. Here's how to do it.
  5. Investing

    Profit Metrics: Gross, Operating & Net Profits

    In addition to net profit, most analysts look at a company’s gross profit and operating profit to gauge performance.
  6. Investing

    Operating Profit

    Operating profit is the profit generated from the core business of a company before accounting for interest and taxes.
  7. Investing

    Understanding Profit Metrics: Gross, Operating and Net Profits

    Rather than relying solely on net profit figures to evaluate a company's performance, seasoned investors will often look at gross profit and operating profit as well.
  8. Taxes

    Calculating Net of Tax

    Net of tax is a figure that has been adjusted for taxes.
  9. Investing

    Zooming In On Net Operating Income

    NOI is a long-run profitability measure that smart investors can count on.
  10. Taxes

    What is Profit Before Tax?

    Profit before tax measures a company’s profits before it pays corporate income tax.
RELATED FAQS
  1. What is the difference between operating income and operating profit?

    Find out why operating margin and operating income can be treated synonymously with EBIT, but how they all differ from operating ... Read Answer >>
  2. What is the difference between Operating Cash Flow and Net Operating Income (NOI)?

    Learn what operating cash flow and net operating income are, how the two metrics are calculated and the main difference between ... Read Answer >>
  3. What are the differences between operating profit and operating income?

    Learn how operating income, also known as operating profit, is determined. Also, see how investors use this number on the ... Read Answer >>
  4. What is the difference between operating income and revenue?

    Understand the definitions of revenue and operating income, how they are calculated and interpreted, and how operating income ... Read Answer >>
  5. What is the Difference Between Operating Income and Net Income?

    Understand the difference between operating income and net income, including the calculations and interpretations of each, ... Read Answer >>
  6. Is operating profit the same as net income?

    Understand the difference between operating profit and net income, including how each type relates to the other and how both ... Read Answer >>
Hot Definitions
  1. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  2. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  3. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  4. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  5. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
  6. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
Trading Center