NOPAT

Net operating profit after taxes (NOPAT ) or German net operating profit after taxes denotes the after-tax profit, hence the operating profit after tax.

From the perspective of all capital ( ie debt and equity ) is the NOPAT of already taxed income that can be distributed to the investors.

Calculation

To calculate the NOPAT, you first have to know the EBIT (Earnings Before Interest and Taxes). This follows from the result of the P & L (profit and loss account). Deducting from this the ( fictional) taxes from, the result obtained is the NOPAT.

Net income ( profit ) EBIT Borrowing Interest (net of tax shield) - the actual tax expense ( EBIT ) - Extraordinary income or   -------------------------------------------------- -------------- = NOPAT = NOPAT The value of the NOPAT is generally of lesser interest. It is used more indicators such as Economic Value Added ( EVA) or the Return on Capital Employed ( ROCE) to calculate.

Demarcation to NOPLAT

During the NOPAT ( Net Operating Profit After Taxes ) actual tax payable is withdrawn from the EBIT, the notional tax payable will be deducted at NOPLAT ( Net Operating Profit Less Adjusted Taxes). Since no taxes on interest expenses are paid, the NOPAT is higher than the NOPLAT unless borrowing costs exist. Since the difference was netted again in the next period, results in the medium term compensation.