Harmeling Enterprises experienced a decline in net operating profit after taxes (NOPAT). Which of the following definitely cannot help explain this decline?
A) Sales revenues decreased.
B) Costs of goods sold increased.
C) Depreciation increased.
D) Interest expense increased.
E) Taxes increased.

Question

Quizplus · Accepted Answer

Interest expense is not included in the calculation of NOPAT, which focuses on operating profits before interest and taxes. Therefore, an increase in interest expense cannot directly explain a decline in NOPAT.

Harmeling Enterprises Experienced a Decline in Net Operating Profit After