NOPAT = Net Income - after-tax Non-Operating Revenue + after-tax Non-Operating Expenses + after-tax Interest |
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NOPAT provides adjustment to Net Income for:
- Non-Operating Revenue – because it does not represent the primary Business gains
- Non-Operating Expense – because it does not represent the primary Business expenses
- Interest – because there is a flexibility in the way Business finance its activity
with all above being adjusted for IncomeTaxRate.
Unlike Net Income the NOPAT represents the true, on-going profitability of the Business.
If Business is strictly primary (with no Non-Operating Revenue and Non-Operating Expense) and does not use external financing then NOPAT = Net Income.
See also
Business / Business Administration / Financial Management / Financial Accounting / Profit and Loss (P&L)
[ Net Income ]