NOPAT removes the effect of financing choices, so companies with different amounts of debt can be compared on their operating performance alone.
How to use the NOPAT Calculator – Net Operating Profit After Tax
- Operating profit (EBIT)
- Tax rate
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter operating profit (EBIT) and the tax rate.
Tips
- Use the nominal annual rate and pick the compounding frequency your bank or broker states.
- Small differences in return or fees compound into large differences over decades.
- Run the calculation with a cautious, a central and an optimistic return to see the range of outcomes.
- Past returns do not guarantee future returns – nothing here is investment advice.
Common mistakes to avoid
- Comparing an APR with an APY or effective rate.
- Ignoring inflation, taxes and fees when judging a real return.
- Entering a percentage as a decimal (5 instead of 0.05 is correct here).
Inputs explained
| Field | What to enter |
|---|---|
| Operating profit (EBIT) | Amount in your currency |
| Tax rate | In % |
What each result means
- NOPAT = [Operating profit (EBIT)]×(1 – [Tax rate]÷100)
- Operating taxes = [Operating profit (EBIT)]×[Tax rate]÷100
Example values
How the main result changes when Operating profit changes and everything else stays at the example values above:
| Operating profit (EBIT) | NOPAT |
|---|---|
| 2,000,000 | 1,580,000 |
| 3,000,000 | 2,370,000 |
| 4,000,000 | 3,160,000 |
| 5,000,000 | 3,950,000 |
| 6,000,000 | 4,740,000 |
| 8,000,000 | 6,320,000 |
Formula
NOPAT = operating profit (EBIT) × (1 − tax rate)Worked example
Inputs — Operating profit (EBIT): $4,000,000; Tax rate: 21 %.
Results — NOPAT = $3,160,000.00; Operating taxes = $840,000.00.
Frequently asked questions
What is NOPAT?
Operating profit after tax, ignoring interest expense.
Why ignore interest?
So the measure reflects operations, not how the company is financed.
How is NOPAT used?
In ROIC, EVA and free cash flow to the firm.
What formula does the NOPAT Calculator – Net Operating Profit After Tax use?
NOPAT = operating profit (EBIT) × (1 − tax rate).