# What is my NOPAT?

Computes NOPAT (net operating profit after taxes): operating income (EBIT) times one minus the tax rate, from a typed rate or the effective rate.

- Page: https://www.acalculator.org/finance/nopat-calculator
- JSON spec: https://www.acalculator.org/finance/nopat-calculator.json
- Version: 77509ac389d1

## Default answer

Example with the default inputs (Operating income (EBIT) $43,000.00, Tax rate from Income taxes, Income tax expense $6,000.00, Income before taxes $41,000.00): Operating income of $43,000.00 at a tax rate of 14.63% leaves NOPAT of $36,707.32.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| ebit | Operating income (EBIT) | Earnings before interest and taxes. Negative for an operating loss. |
| rate | Tax rate from | Type a tax rate, or work out the effective rate from the income statement. |
| tax | Tax rate | The income tax rate on operating income, such as the statutory or effective rate. |
| taxes | Income tax expense | Income tax expense on the income statement. |
| pti | Income before taxes | Pretax income: operating income less interest and other non-operating items. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| nopat | NOPAT | EBIT × (1 − tax rate). |
| taxOnEbit | Taxes on operating income | EBIT × tax rate. |
| rateUsed | Tax rate used | The rate you typed, or income tax expense ÷ income before taxes × 100. |

## Method

Tax rate = the rate typed, or income tax expense ÷ income before taxes. NOPAT = EBIT × (1 − tax rate). Taxes on operating income = EBIT × tax rate.

## Assumptions

- The tax rate applies to all of operating income; an operating loss is taxed at the same rate (it saves tax).
- The effective rate comes from the same income statement as EBIT.
- Arithmetic is exact on the typed decimals; money shows to the cent and the rate to 2 decimals, halves up.

## Worked examples

1. ebit = $43,000.00, rate = taxes, taxes = $6,000.00, pti = $41,000.00 gives nopat = $36,707.32, taxOnEbit = $6,292.68, rateUsed = 14.634146%. Source: Aswath Damodaran, NYU Stern, Variables used in Data Set (after-tax operating income = EBIT (1 − t), the numerator of return on capital and free cash flow to the firm). https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/variable.htm; OpenStax, Principles of Finance, 5.1 The Income Statement (Clear Lake Sporting Goods: operating income $43,000, interest $2,000, income tax expense $6,000, net income $35,000). https://openstax.org/books/principles-finance/pages/5-1-the-income-statement.
2. ebit = $1,000,000.00, rate = rate, tax = 21% gives nopat = $790,000.00, taxOnEbit = $210,000.00, rateUsed = 21%. Source: Aswath Damodaran, NYU Stern, Variables used in Data Set (after-tax operating income = EBIT (1 − t), the numerator of return on capital and free cash flow to the firm). https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/variable.htm.
3. ebit = -$50,000.00, rate = rate, tax = 25% gives nopat = -$37,500.00, taxOnEbit = -$12,500.00. Source: Aswath Damodaran, NYU Stern, Variables used in Data Set (after-tax operating income = EBIT (1 − t), the numerator of return on capital and free cash flow to the firm). https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/variable.htm.
4. ebit = $2,500,000.50, rate = rate, tax = 26.5% gives nopat = $1,837,500.37, taxOnEbit = $662,500.13.

## FAQ

### What is NOPAT?

NOPAT, net operating profit after taxes, is what a business would earn from its operations after tax if it had no debt. It takes tax off operating income (EBIT) but ignores interest, so it shows the profit available to lenders and shareholders together.

### How do I calculate NOPAT?

Multiply operating income by 1 minus the tax rate. EBIT of $1,000,000 at a 21% tax rate gives NOPAT of 1,000,000 × 0.79 = $790,000.

### Which tax rate should I use?

The effective rate from the income statement (income tax expense ÷ income before taxes) shows what the company actually paid. Clear Lake Sporting Goods paid $6,000 of tax on $41,000 of pretax income, an effective rate of 14.63%. Analysts also use the statutory rate set by law, or the marginal rate on the next dollar of income.

### How is NOPAT different from net income?

Net income is after interest, so it depends on how much the company borrowed. NOPAT leaves interest out. Clear Lake's net income was $35,000, but its NOPAT, at its effective rate, was $36,707.32.

### What is NOPAT used for?

NOPAT is the top of return on invested capital (ROIC = NOPAT ÷ invested capital) and the starting point of free cash flow to the firm. Comparing NOPAT with a charge for the capital used gives economic profit.

### Can NOPAT be negative?

Yes, when operating income is a loss. This calculator applies the same rate to a loss, as if the loss saves tax: an operating loss of $50,000 at 25% gives NOPAT of −$37,500. If the loss saves no tax, use a 0% rate.

## Sources

- Aswath Damodaran, NYU Stern School of Business, Variables used in Data Set: after-tax operating income EBIT (1 − t) is the numerator of return on capital, ROC = EBIT (1 − t) ÷ (BV of debt + BV of equity − cash), and of free cash flow to the firm, FCFF = EBIT (1 − t) − (capital expenditures − depreciation) − change in non-cash working capital. https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/variable.htm (retrieved 2026-10-19)
- OpenStax, Principles of Finance, 5.1 The Income Statement: Clear Lake Sporting Goods (operating income $43,000, interest expense $2,000, income tax expense $6,000, net income $35,000). https://openstax.org/books/principles-finance/pages/5-1-the-income-statement (retrieved 2026-10-19)
- OpenStax, Principles of Finance, 6.4 Solvency Ratios: operating income is earnings before interest and taxes (EBIT). https://openstax.org/books/principles-finance/pages/6-4-solvency-ratios (retrieved 2026-10-19)