How to calculate Net Operating Profit After Tax NOPAT?

Start with your operating income (revenue minus all operating expenses), then multiply by (1 - tax rate). For example, if you have $100,000 operating income and a 25% tax rate, your NOPAT would be $100,000 × (1 - 0.25) = $75,000.

How to find net operating profit after taxes?

You can find NOPAT by taking your EBIT (earnings before interest and taxes) from your income statement and applying your effective tax rate. Alternatively, start with net income and add back interest expenses and tax savings from debt to isolate the operating profit component.

Is EBIT 1 T the same as NOPAT?

Yes, EBIT × (1 - T) where T is the tax rate is the standard NOPAT formula. This calculation takes your earnings before interest and taxes and applies the tax rate to show what your after-tax operating profit would be without any debt financing benefits.

What is the formula for net profit after tax?

Net profit after tax is simply your company's bottom-line net income, which includes all revenues, expenses, interest, and taxes. NOPAT is different because it focuses only on operating profit after taxes, excluding the effects of financing decisions and non-operating items.

Net Operating Profit After Tax (NOPAT) Calculator

Calculate your company's true operating profit after taxes without the effects of debt or financing decisions.

- Net Operating Profit After Tax
- Revenue
  $
- Cost Of Goods Sold (COGS)
  $
- Selling, General, and Administrative Expenses (SG&A)
  $
- Depreciation and Amortization
  $
- Effective Tax Rate (%)
- Operating income$ 150,000.00
- Tax Paid$ 45,000.00
- NOPAT$ 105,000.00

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How Net Operating Profit After Tax (NOPAT) Calculator Works

NOPAT (Net Operating Profit After Tax) measures your company's operational performance by showing how much profit you'd keep from core business activities after paying taxes, but without considering any debt-related tax savings. Think of it as your 'pure' operating performance metric.

The calculation starts with your operating income (also called EBIT), which represents profit from your main business operations before interest and taxes. This includes revenue minus all operating costs like cost of goods sold, salaries, rent, and other day-to-day expenses.

From there, you apply your effective tax rate to see how much you'd pay in taxes on that operating income, assuming you had no debt. This gives you a clear picture of operational efficiency that's not influenced by financing decisions.

NOPAT is particularly useful for comparing companies with different capital structures or when evaluating potential acquisitions, since it strips away the effects of leverage and focuses purely on how well management runs the core business.

Net Operating Profit After Tax (NOPAT) Calculator Formula Breakdown

Formula

Operating income = Revenue - Cost of goods sold - Operating expenses (SG&A, depreciation, etc.)
NOPAT = Operating income × (1 - Tax rate)

Variables Explained

RevenueTotal income generated from your primary business operations before any expenses. This includes sales of products or services but excludes one-time gains or investment income. Found at the top of your income statement.
Cost Of Goods Sold (COGS)Direct costs of producing or purchasing the goods you sell, including materials, labor, and manufacturing overhead. For service businesses, this might include direct labor costs. Found on your income statement below revenue.
Selling, General, and Administrative Expenses (SG&A)Indirect operating expenses like salaries, rent, marketing, utilities, and office supplies that aren't directly tied to production. These are ongoing costs of running your business, excluding interest and taxes.
Depreciation and AmortizationThe portion of long-term asset costs (equipment, buildings, intangible assets) allocated to the current period. This non-cash expense reflects how your assets lose value over time and is found in your operating expenses section.
Effective Tax RateThe percentage of operating income you actually pay in taxes, calculated from your historical tax payments or current tax situation. Use your company's actual tax rate rather than the statutory rate for more accuracy.

Example Calculation

Given:

Revenue: $500,000
Cost Of Goods Sold (COGS): $200,000
Selling, General, and Administrative Expenses (SG&A): $100,000
Depreciation and Amortization: $50,000
Effective Tax Rate: 30%

Calculation:

Operating income = $500,000 - $200,000 - $100,000 - $50,000 = $150,000
NOPAT = $150,000 × (1 - 0.30) = $150,000 × 0.70 = $105,000

Result:

$105,000

Explanation

This example shows a small manufacturing company with $500,000 in annual revenue. After covering all operating costs, they generate $150,000 in operating income. Their NOPAT of $105,000 represents the after-tax profit available from core operations, giving investors a clear view of operational performance independent of any debt financing.

Tips for Using Net Operating Profit After Tax (NOPAT) Calculator

💡Use your company's actual effective tax rate rather than the statutory rate for more accurate results, as most businesses don't pay the full corporate tax rate due to deductions and credits.
💡Exclude one-time gains, losses, or unusual expenses from your operating income calculation to get a clearer picture of ongoing operational performance.
💡Compare your NOPAT margin (NOPAT ÷ Revenue) to industry peers to benchmark your operational efficiency, since this metric neutralizes differences in capital structure.

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