NOPAT is short for Net Operating Profit after Tax.
It represents a company’s theoretical income from operations if it had no debt.
NOPAT is frequently used in economic value added calculations and is a more accurate look at operating efficiency for leveraged companies.
Formula to calculate NOPAT.
Operating profit is the profitability of the business, before taking into account interest and taxes.
Suppose the tax rate is 5% and the operating profit is $ 300,000. Calculate the net operating profit after tax.
Therefore, the NOPAT is $ 285,000.