Investing for Beginners .EU, investing

NOPAT (‘net operating profit after tax’ or ‘after tax operating profit’) is equal to operating profit less taxes. It is adjusted by tax rate because the part cost of debt which is part of cost of capital is tax deductible. 

Basically, NOPAT can be used in various financial calculations instead of net profit in any formula which measures profitability of the company on basis of assets (but not the equity). Such ratios where NOPAT fits very well can be ROA, ROIC, EV/NOPAT or other. However, NOPAT should not be mistaken to EBITDA or free cash flow while those are different measures.