Net Operating Profit After Tax - NOPAT

See: Operating Profit.

Net operating profit after tax sounds like it takes a lot into account. However, its defining feature might be the thing left out of its incredibly long, incredibly specific name: debt.

NOPAT takes into account all the expenses for running the business, up to and including taxes that have to be paid. However, it doesn't take into account the amount needed for debt service. The number basically says, "Let's just imagine that we didn't borrow any money to build this factory, or take out those additional loans to expand into Europe. If our debt was magically paid by some generous anonymous benefactor, like in a Dickens novel, here's what our earnings would be."

The NOPAT figure allows investors to judge the earnings potential of the company's operations.