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Finance Calc Kit
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NOPAT Calculator

Calculate Net Operating Profit After Tax (NOPAT) from operating income and tax rate to evaluate a company operating efficiency.

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Net Operating Profit After Tax (NOPAT)

$395,000.00

$500,000.00 × (1 - 21.00%)

Tax expense

$105,000.00

21.00% of operating income

After-tax retention

79.00%

Share of operating income retained as NOPAT

Operating income allocation

Operating income$500,000.00
  • NOPAT (after tax)$395,000.0079.0%
  • Tax expense$105,000.0021.0%

How NOPAT is calculated

Three steps from operating income and tax rate to net operating profit after tax.

  1. Start with operating income

    Operating income (EBIT) before tax is $500,000.

  2. Apply the after-tax multiplier

    NOPAT=Operating Income×(1−Tax Rate100)\text{NOPAT} = \text{Operating Income} \times \left(1 - \frac{\text{Tax Rate}}{100}\right)

    $500,000 × (1 - 21.00%) = $500,000 × 0.7900 = $395,000.00

  3. Interpret the result

    After a 21.00% tax rate, $395,000.00 of operating profit remains as NOPAT. Tax expense equals $105,000.00.

Report tool

What is NOPAT?

Net Operating Profit After Tax (NOPAT) measures how much operating profit a business keeps after applying taxes to its core operations. Analysts use NOPAT in valuation models, return on invested capital (ROIC) analysis, and economic value added (EVA) calculations because it reflects operating performance without financing distortions. Turn NOPAT into a full ROIC and EVA comparison with the return on invested capital calculator.

NOPAT is the starting point for the economic value added calculator, which compares operating profit to the full cost of capital. It also feeds free cash flow models such as the free cash flow calculator when you need operating earnings on a tax-adjusted basis.

NOPAT formula

NOPAT=Operating Income×(1−Tax Rate100)\text{NOPAT} = \text{Operating Income} \times \left(1 - \frac{\text{Tax Rate}}{100}\right)

Operating income is earnings before interest and taxes (EBIT) from core business operations. The tax rate is the effective rate applied to operating profit. NOPAT removes the tax burden from operating earnings so you can compare performance across companies with different capital structures.

Worked example

A company reports $500,000 in operating income and faces a 21% effective tax rate. NOPAT equals $500,000 × (1 - 0.21), or $395,000. Tax expense is $105,000, and 79% of operating income remains as NOPAT.

When to use NOPAT

  • ROIC analysis: Divide NOPAT by invested capital to see whether operations earn more than the cost of capital.
  • EVA and value creation: Compare NOPAT to the capital charge (invested capital × WACC) to measure economic profit.
  • Cross-company comparison: NOPAT strips out interest expense differences caused by leverage, making operating performance easier to compare.

Frequently asked questions

How is NOPAT different from net income?
Net income includes interest expense, non-operating items, and one-time gains or losses. NOPAT focuses only on core operating profit after tax, excluding financing effects.
What tax rate should I use?
Use the effective tax rate on operating income for the period you are analyzing. For U.S. corporations, the federal statutory rate is 21%, but state taxes and credits often push the effective rate higher or lower.
Can NOPAT be negative?
Yes. If operating income is negative (an operating loss), NOPAT will also be negative. This calculator treats operating income as a non-negative input for standard profitability analysis.
How does NOPAT relate to EBIT?
EBIT is operating income before tax. NOPAT applies the tax rate to EBIT, giving you the after-tax operating profit available to all capital providers.
Why is NOPAT used in DCF models?
Discounted cash flow models need unlevered operating cash flows. NOPAT provides a tax-adjusted operating earnings base that is independent of how the company is financed.

Resources and references

The formulas and methods in this calculator were checked against these independent sources.