Net Operating Profit After Tax - NOPAT

  

See: Operating Profit.

Net operating profit after tax sounds like it takes a lot into account. However, its defining feature might be the thing left out of its incredibly long, incredibly specific name: debt.

NOPAT takes into account all the expenses for running the business, up to and including taxes that have to be paid. However, it doesn't take into account the amount needed for debt service. The number basically says, "Let's just imagine that we didn't borrow any money to build this factory, or take out those additional loans to expand into Europe. If our debt was magically paid by some generous anonymous benefactor, like in a Dickens novel, here's what our earnings would be."

The NOPAT figure allows investors to judge the earnings potential of the company's operations.

Related or Semi-related Video

Finance: What are operating expenses?2 Views

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Finance allah shmoop what are operating expenses Well simply put

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operating expenses are the expenses it takes to operate a

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business Yeah in sort of big fat dog here but

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why would they be called out separate from any other

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expenses You know manish thana like what other expenses are

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there anyway that aren't operating All right Well we'll noodle

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the notion here for a moment Noodling noodling Well if

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you are running a drone making plant while your operating

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expenses are things like the cost of plastic molds for

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the drone itself batteries computer chips for the brains of

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the drone computer chips to communicate wirelessly with the controller

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copter blades lights packing material labour to put all this

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together and then they're shipping containers Don't forget shipping containers

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The drones don't just fly to the customer way need

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pretty ribbons on them anyway Never mind on that part

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so all of the above our core operating expenses they're

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part of what comprises the gross profits of the company

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The revenue minus the cost actually make the product but

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to fully operate the business you need to include a

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ton of other things like paying for insurance rent for

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ah building You need lawyers because they always need lawyers

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and and there's secretaries and other bureaucrats Teo you know

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do stuff run things Yeah well added up those operating

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expenses when subtracted from revenues while they give you operating

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profits or crete acts profits And there are other expenses

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like capital expenses That is you spend one hundred million

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box on a factory teo stamp out drones or whatever

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And that cash is spent immediately upfront but factory last

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twenty years So well you know what do you do

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Well yeah You take five million a year to straight

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lined appreciate factory too Zero after it's used up Well

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you might also have acquired patents which are similarly written

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down in value or advertised away as their value slowly

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fades with time like shmoop writers So what's left Well

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what comes after operating profits Well taxes on dividends and

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a bunch of other crap like you know if the

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company had invested in things that had to be written

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up or down and other branham stuff it's all out

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there after operating expenses But a key idea here is

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that operating expenses are more or less Quote everything unquote

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That it takes to run the business except taxes in

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dividend obligations which aren't counted in this calculation So now

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that you have a handle on what comprises operating expenses

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well you too can be a no smooth operator Shod

02:50

a member Ask your parents in oh no she's a 00:02:53.33 --> [endTime] smooth operator

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