Startup & fundraising
NOPAT (Net Operating Profit After Tax)
Formula reviewed by Tahir Asif, CMA
Operating profit after tax, calculated as if the company had no debt, so financing choices do not affect it.
NOPAT = EBIT × (1 − tax rate). It removes interest expense before tax is applied, so two companies with identical operations but different amounts of debt report the same NOPAT, even though their net income differs.
NOPAT is the numerator of ROIC and the starting point for economic value added (EVA = NOPAT − WACC × invested capital), both of which are built to separate how well a business operates from how it happens to be financed.
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