NOPAT = Net Income - after-tax Non-operating Gains + after-tax Non-operating Losses + after-tax Interest
NOPAT provides adjustment to Net Income for one-time losses and other non-recurring charges because they don’t represent the true, on-going profitability of the Business.
For example, a company may incur acquisition costs that would not be expected to occur in the future.
These costs would negatively effect current year earnings, but do not accurately portray the operations of the Business.
These costs should be excluded when performing any type of analysis to determine the operating and financial efficiency of a Business or to compare performance against other Businesses.
See also
Business / Business Administration / Financial Management / Financial Accounting / Profit and Loss (P&L)
[ Net Income ]