NOPAT is
A)net income with costs removed that managers at the divisional level are unable to control.
B)net income plus noncash flow amounts.
C)net income less the cost of financing.
D)net income minus noninterest-bearing current liabilities.

Question

Quizplus · Accepted Answer

NOPAT stands for Net Operating Profit After Tax. It is calculated by subtracting the income tax expense and the after-tax cost of capital from the operating profit. This metric measures the profitability of a company's operations by removing the effects of financing decisions and other non-operating factors, allowing managers to focus on the performance of the business itself. Therefore, the correct option is A, net income with costs removed that managers at the divisional level are unable to control.

NOPAT Is