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The formula for Net Operating Profits After Tax (NOPAT). Its the same as Net Profit...

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Finance

The formula for Net Operating Profits After Tax (NOPAT). Its the same as Net Profit After Tax (NPAT) or Net Income (NI), but interest expense (IntExp) is disregarded/ignored.

NPAT = (Rev-COGS-FixedCosts-Depr-IntExp)*(1-tc) = Earnings = NI

NOPAT = (Rev-COGS-FixedCosts-Depr)*(1-tc)

Now for profit-making firms with leverage, which formula deducts the actual amount of tax that the firm will pay?

Select one:

a.

NPAT.

b.

NOPAT.

c.

Both NPAT and NOPAT deduct the correct amount of tax.

d.

Neither.

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