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.

**Example:**

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.