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.

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.


Filed Under: , ,

comments powered by Disqus
Hot Definitions
  1. Amplitude

    The difference in price from the midpoint of a trough to the midpoint of a peak of a security. Amplitude is positive when calculating a bullish retracement (when calculating from trough to peak) and negative when calculating a bearish retracement (when calculating from peak to trough).
  2. Ascending Triangle

    A bullish chart pattern used in technical analysis that is easily recognizable by the distinct shape created by two trendlines. In an ascending triangle, one trendline is drawn horizontally at a level that has historically prevented the price from heading higher, while the second trendline connects a series of increasing troughs.
  3. National Best Bid and Offer - NBBO

    A term applying to the SEC requirement that brokers must guarantee customers the best available ask price when they buy securities and the best available bid price when they sell securities.
  4. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an investor has bought securities on margin, the minimum required level of margin is 25% of the total market value of the securities in the margin account.
  5. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
  6. Degree Of Financial Leverage - DFL

    A ratio that measures the sensitivity of a company’s earnings per share (EPS) to fluctuations in its operating income, as a result of changes in its capital structure. Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in earnings before interest and taxes (EBIT).
Trading Center