674:
Moreover, managers are given enormous discretion in classifying items and how they can present disclosures. Further complications are that judgement must be exercised to determine a disclosure’s impact on operating performance and to place each disclosure in the proper economic category." He argues that great diligence must be paid to ensure that NOPAT is calculated accurately, making adjustments for both reported and hidden items. Noko notes that NOPAT can be calculated in two mathematically equivalent ways. From a financing perspective, NOPAT can be described as below,
971:
40:
669:
NOPAT doesn't include one-time losses and other non-recurring charges, because they don't represent the true, ongoing profitability of the business. For example, a company may incur acquisition costs that would not be expected to occur in the future. These costs would negatively affect current year
673:
According to analyst and economist, Joseph Noko, "An added difficulty is that the elements we need to determine the operating performance of a business are not simply on the face of the financial statement, but they are sprinkled across the annual report, in the MD&A, the footnotes and notes.
670:
earnings, but do not accurately portray the operations of the firm. These costs should be excluded when performing any type of analysis to determine the operating and financial efficiency of a firm or to compare performance against other firms.
635:
for all investors, including shareholders and debt holders. NOPAT is used by analysts and investors as a precise and accurate measurement of profitability to compare a company's financial results across its history and against competitors.
873:
659:
655:
663:
640:
304:
289:
1008:
883:
294:
603:
454:
158:
55:
309:
299:
65:
632:
361:
489:
366:
314:
257:
398:
647:
to arrive at a value that approximates the value of a firm's annual earnings. NOPAT is precisely calculated as:
351:
1032:
813:
982:
1027:
1001:
596:
403:
39:
237:
113:
848:
1042:
899:
529:
464:
188:
994:
514:
252:
118:
60:
803:
564:
103:
924:
8:
589:
554:
549:
524:
519:
459:
388:
346:
328:
281:
262:
193:
98:
23:
643:
and the effects of other non-operating activities (non-recurring gains and losses) from
393:
228:
183:
879:
617:
574:
569:
148:
123:
356:
242:
1037:
444:
408:
198:
178:
163:
108:
93:
50:
978:
808:
449:
417:
128:
1021:
559:
422:
341:
336:
173:
494:
233:
728:
whereas, from an operating perspective, NOPAT can be described as below,
380:
651:
644:
484:
168:
31:
875:
Beyond
Earnings: Applying the HOLT CFROI and Economic Profit Framework
833:
267:
247:
153:
413:
88:
970:
436:
218:
83:
766:= Earnings Before Interest, Taxes, and Amortization (EBITA)
223:
629:
900:"Net Operating Profit After Tax (NOPAT) - Joseph Noko"
952:
872:
Holland, David A.; Matthews, Bryant A. (2017-12-11).
1019:
925:"Notes on Accounting Adjustments - Joseph Noko"
871:
843:
841:
1002:
597:
838:
756:= Earnings Before Interest and Taxes (EBIT)
305:International Financial Reporting Standards
1009:
995:
604:
590:
826:
781:Net Operating Profit Before Tax (NOPBT)
771:+ Adjustments for Capitalized Expenses
1020:
295:Generally-accepted auditing standards
965:
639:When calculating NOPAT, one removes
946:
310:International Standards on Auditing
13:
977:This finance-related article is a
14:
1054:
697:+ Increase in Equity Equivalents
367:Notes to the financial statements
969:
692:+ Adj. for Capitalized Expenses
315:Management Accounting Principles
38:
717:+ Interest Expense After Taxes
953:G. Benett Stewart III (1991).
917:
892:
865:
622:net operating profit after tax
1:
849:"Education – Metrics – NOPAT"
819:
290:Generally-accepted principles
981:. You can help Knowledge by
814:Financial statement analysis
7:
797:
736:NOPAT (Operating Approach)
682:NOPAT (Financing Approach)
10:
1059:
964:
878:. John Wiley & Sons.
159:Constant purchasing power
56:Constant purchasing power
761:+ Goodwill Amortization
490:Accounting organizations
478:People and organizations
628:) is a company's after-
238:Amortization (business)
786:Cash Operating Taxes
776:+ Income Equivalents
746:– Operating Expenses
362:Management discussion
16:Financial measurement
1033:Fundamental analysis
804:Economic value added
660:Non-operating Losses
329:Financial statements
282:Accounting standards
955:The Quest for Value
732:
678:
656:Non-operating Gains
555:Earnings management
525:Positive accounting
399:Double-entry system
389:Bank reconciliation
194:Revenue recognition
832:Moneyterms.co.uk.
741:Operating Revenue
731:
677:
530:Sarbanes–Oxley Act
465:Sarbanes–Oxley Act
394:Debits and credits
229:Cost of goods sold
184:Matching principle
1028:Corporate finance
990:
989:
885:978-1-119-44048-2
795:
794:
726:
725:
707:+ Other Expenses
618:corporate finance
614:
613:
575:Two sets of books
570:Off-balance-sheet
212:Selected accounts
149:Accounting period
1050:
1011:
1004:
997:
973:
966:
958:
957:. HarperCollins.
947:External sources
940:
939:
937:
936:
921:
915:
914:
912:
911:
896:
890:
889:
869:
863:
862:
860:
859:
845:
836:
830:
733:
730:
687:GAAP Net Income
679:
676:
664:Interest Expense
641:Interest Expense
633:operating profit
606:
599:
592:
42:
19:
18:
1058:
1057:
1053:
1052:
1051:
1049:
1048:
1047:
1018:
1017:
1016:
1015:
962:
949:
944:
943:
934:
932:
923:
922:
918:
909:
907:
898:
897:
893:
886:
870:
866:
857:
855:
847:
846:
839:
831:
827:
822:
800:
751:– Hidden Items
712:– Hidden Items
702:– Other Income
610:
581:
580:
579:
544:
536:
535:
534:
509:
501:
500:
499:
479:
471:
470:
469:
439:
429:
428:
427:
383:
373:
372:
371:
331:
321:
320:
319:
284:
274:
273:
272:
213:
205:
204:
203:
199:Unit of account
179:Historical cost
164:Economic entity
143:
135:
134:
133:
78:
70:
51:Historical cost
17:
12:
11:
5:
1056:
1046:
1045:
1040:
1035:
1030:
1014:
1013:
1006:
999:
991:
988:
987:
974:
960:
959:
948:
945:
942:
941:
929:josephnoko.com
916:
904:josephnoko.com
891:
884:
864:
853:New Constructs
837:
824:
823:
821:
818:
817:
816:
811:
809:Free cash flow
806:
799:
796:
793:
792:
788:
787:
783:
782:
778:
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773:
772:
768:
767:
763:
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758:
757:
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752:
748:
747:
743:
742:
738:
737:
724:
723:
719:
718:
714:
713:
709:
708:
704:
703:
699:
698:
694:
693:
689:
688:
684:
683:
612:
611:
609:
608:
601:
594:
586:
583:
582:
578:
577:
572:
567:
562:
557:
552:
546:
545:
542:
541:
538:
537:
533:
532:
527:
522:
517:
511:
510:
507:
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503:
502:
498:
497:
492:
487:
481:
480:
477:
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472:
468:
467:
462:
457:
452:
447:
441:
440:
435:
434:
431:
430:
426:
425:
420:
418:General ledger
411:
406:
401:
396:
391:
385:
384:
379:
378:
375:
374:
370:
369:
364:
359:
354:
349:
344:
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333:
332:
327:
326:
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318:
317:
312:
307:
302:
297:
292:
286:
285:
280:
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276:
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271:
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265:
260:
255:
250:
245:
240:
231:
226:
221:
215:
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210:
207:
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201:
196:
191:
186:
181:
176:
171:
166:
161:
156:
151:
145:
144:
141:
140:
137:
136:
132:
131:
126:
121:
116:
111:
106:
101:
96:
91:
86:
80:
79:
76:
75:
72:
71:
69:
68:
63:
58:
53:
47:
44:
43:
35:
34:
28:
27:
15:
9:
6:
4:
3:
2:
1055:
1044:
1043:Finance stubs
1041:
1039:
1036:
1034:
1031:
1029:
1026:
1025:
1023:
1012:
1007:
1005:
1000:
998:
993:
992:
986:
984:
980:
975:
972:
968:
967:
963:
956:
951:
950:
930:
926:
920:
905:
901:
895:
887:
881:
877:
876:
868:
854:
850:
844:
842:
835:
829:
825:
815:
812:
810:
807:
805:
802:
801:
790:
789:
785:
784:
780:
779:
775:
774:
770:
769:
765:
764:
760:
759:
755:
754:
750:
749:
745:
744:
740:
739:
735:
734:
729:
721:
720:
716:
715:
711:
710:
706:
705:
701:
700:
696:
695:
691:
690:
686:
685:
681:
680:
675:
671:
667:
665:
661:
657:
653:
648:
646:
642:
637:
634:
631:
627:
623:
619:
607:
602:
600:
595:
593:
588:
587:
585:
584:
576:
573:
571:
568:
566:
563:
561:
560:Error account
558:
556:
553:
551:
548:
547:
540:
539:
531:
528:
526:
523:
521:
518:
516:
513:
512:
505:
504:
496:
493:
491:
488:
486:
483:
482:
475:
474:
466:
463:
461:
458:
456:
453:
451:
448:
446:
443:
442:
438:
433:
432:
424:
423:Trial balance
421:
419:
415:
412:
410:
407:
405:
404:FIFO and LIFO
402:
400:
397:
395:
392:
390:
387:
386:
382:
377:
376:
368:
365:
363:
360:
358:
355:
353:
350:
348:
345:
343:
342:Balance sheet
340:
338:
337:Annual report
335:
334:
330:
325:
324:
316:
313:
311:
308:
306:
303:
301:
298:
296:
293:
291:
288:
287:
283:
278:
277:
269:
266:
264:
261:
259:
256:
254:
251:
249:
246:
244:
241:
239:
235:
232:
230:
227:
225:
222:
220:
217:
216:
209:
208:
200:
197:
195:
192:
190:
187:
185:
182:
180:
177:
175:
174:Going concern
172:
170:
167:
165:
162:
160:
157:
155:
152:
150:
147:
146:
139:
138:
130:
127:
125:
122:
120:
117:
115:
112:
110:
107:
105:
102:
100:
97:
95:
92:
90:
87:
85:
82:
81:
74:
73:
67:
64:
62:
59:
57:
54:
52:
49:
48:
46:
45:
41:
37:
36:
33:
30:
29:
25:
21:
20:
983:expanding it
976:
961:
954:
933:. Retrieved
931:. 2024-05-10
928:
919:
908:. Retrieved
906:. 2024-06-04
903:
894:
874:
867:
856:. Retrieved
852:
828:
727:
672:
668:
662:+ after-tax
658:+ after-tax
654:- after-tax
649:
638:
625:
621:
615:
495:Luca Pacioli
416: /
236: /
234:Depreciation
142:Key concepts
114:Governmental
508:Development
485:Accountants
381:Bookkeeping
300:Convergence
258:Liabilities
189:Materiality
77:Major types
1022:Categories
935:2024-09-02
910:2024-09-02
858:2021-10-13
820:References
652:Net Income
645:Net Income
543:Misconduct
169:Fair value
119:Management
61:Management
32:Accounting
650:NOPAT = (
565:Hollywood
445:Financial
347:Cash-flow
104:Financial
798:See also
550:Creative
520:Research
450:Internal
437:Auditing
253:Goodwill
248:Expenses
99:Forensic
24:a series
22:Part of
515:History
409:Journal
268:Revenue
154:Accrual
1038:Profit
882:
791:NOPAT
722:NOPAT
460:Report
414:Ledger
357:Income
352:Equity
263:Profit
243:Equity
219:Assets
124:Social
89:Budget
834:NOPAT
626:NOPAT
455:Firms
84:Audit
979:stub
880:ISBN
224:Cash
109:Fund
94:Cost
630:tax
616:In
129:Tax
66:Tax
1024::
927:.
902:.
851:.
840:^
666:)
620:,
26:on
1010:e
1003:t
996:v
985:.
938:.
913:.
888:.
861:.
624:(
605:e
598:t
591:v
Text is available under the Creative Commons Attribution-ShareAlike License. Additional terms may apply.
