NOPAT

This term "NOPAT"was in page 39, book 3 schwser , and it is used in calculating the economic profit, there were no further details about how to calculate it , however after some search, i think that it is calculated using Net income and then add back interest expense and other non operating income and expense to reach to NOPAt, am I right ?! and if so, how come it didn’t deduct the Depreciation to reach NOPAT , it should be a cash basis measurement i guess, HELP pleaseeee

NOPAT = EBIT*(1-T). It is mentioned immediately after they use the term NOPAT for the first time.

net operating profit after tax

cpk123 Wrote: ------------------------------------------------------- > NOPAT = EBIT*(1-T). > > It is mentioned immediately after they use the > term NOPAT for the first time. Alright, how come it didn’t deduct the Depreciation to reach NOPAT , it should be a cash basis measurement i guess,

EBIT already has the Depreciation deducted… if you remember.

cpk123 Wrote: ------------------------------------------------------- > EBIT already has the Depreciation deducted… if > you remember. man, i know that we dedeuct DEP to reach EBIT, but i guess we need to add it back in order to reflect the cash income not the accrrual income

That my friend is not the definition of NOPAT. It is a Net Operating Profit after taxes… by definition it is EBIT ( 1-T)

ok, i just wonder y do we keep the non cash expense deducted and didn’t add it back ?!!

Because your allowed to deduct depreciation for tax purposes even though its not a cash expense

EBIT(1-t) wouldn’t apply for a financial company, because interest revenue/expense would be part of operating income. I just want to mess with you guys

i cut you