Question

The measurement of earnings concept that consists of a company’s profit from operations after taxed are subtracted is ________.

Answer 1

Answer:

Net Operating Profit After Taxes or NOPAT

Explanation:

NOPAT is calculated by substracting the tax expense from the revenue that the company obtains exclusively from its operating activities. This means that NOPAT does not include income from non operating activities like small investments or one time sales of capital goods.

NOPAT is a very important indicator in corporate finance, often used by analysts to gauge a company's true level of profitability. It is also an important element in the calculation of another important indicator, Economic Value Added or EVA.