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Net Operating Profit After Tax - NOPAT
What does it mean?
A company's potential cash earnings if its capitalization was unleveraged (that is, if it had no debt). NOPAT is frequently used in economic value added (EVA) calculations.
Calculated as:
NOPAT = Operating Income x (1 - Tax Rate)
In Other Words...
NOPAT is a more accurate look at operating efficiency for leveraged companies. It does not include the tax savings many companies get because they have existing debt.
Related Links
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Related Terms
After Tax Operating Income - ATOI | Economic Value Added - EVA
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