### Definition: What is Net Operating Profit after Tax (NOPAT)?

**Net Operating Income after Tax (NOPAT)** is the profitability measurements which calculate the theoretical cash amount which is distributed among the shareholders by the company if the company had no debt.

If the company has no obligation then the company can distribute the NOPAT amount among its shareholders at the end of the year.

Investors and creditors use this measurement to measure the company’s efficiency to pay the current obligations and to pay shareholders.

For the measuring of operating efficiency of the company analysts also use this ratio because through this ratio they find company’s operations profitability without considering the financing structure of the company.

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