Net Operating Profit Less Adjusted Taxes - NOPLAT
Definition of 'Net Operating Profit Less Adjusted Taxes - NOPLAT'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. |
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Investopedia explains '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. |
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