NOPAT Calculator


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Calculate the Net Operating Profit After Tax of any company.

What is NOPAT?

The Net Operating Profit After Tax (NOPAT) is a metric of a company's profitability. It represents the company's profit after deducting income tax assuming the company has no debt.

NOPAT is useful when analyzing the company’s performance over time and when comparing similar companies.

Since interest payments are not considered while calculating NOPAT it allows comparison of the companies regardless of the source of their financing. 

How to calculate NOPAT?

The calculation is very easy and all the required information could be found on the financial statement of the company for a given period.

NOPAT formula

NOPAT value can be worked out using following equation:

NOPAT = EBIT * (1 - TAX_RATE)

Where:

NOPAT calculation example

Let’s calculate the NOPAT value for a retail company. The company financial data look as follows:

Revenue: $100,000,000

Cost of Goods Sold (COGS): $55,000,000

Operating expenses:  (SG&A): $15,000,000

Income Tax Rate: 35%

Gross Profit: $45,000,000

Operating Profit: $30,000,000

 

NOPAT = EBIT * (1-TAX_RATE) = $30,000,000 * (1-35%) = $19,500,000

 

For sure NOPAT is a useful metric. However it has its own pros and cons you need to be aware of in order to be able to interpret the results correctly. 

Advantages of NOPAT

  • NOPAT is easy to calculate

  • All the required data is easily accessible in P&L

  • It gives a accurate company’s profit value without involving the debt payments

Disadvantages of NOPAT

  • Because NOPAT is not expressed as a percentage value it doesn’t allow for the direct comparison of companies different in size

 

NOPAT is crutial component of ROIC calculation.


Authors

Created by Lucas Krysiak on 2022-06-10 12:47:41 | Last review by Mike Kozminsky on 2022-09-15 14:03:33

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