Final answer:
NOPLAT is calculated by subtracting taxes from operating income on a company's income statement. This profitability measure shows earnings from business operations after tax.
Step-by-step explanation:
To calculate Net Operating Profit After Tax (NOPLAT) from an income statement or balance sheet, you would typically subtract taxes from operating income, which can be represented by option a: Operating Income - Taxes. This measure is used to assess the profitability of a business from its core operations, excluding the costs and tax benefits of financing. Here is a simplified calculation:
National income (Y) = $300
Taxes = 0.2 or 20%
Tax amount (T) = $60
To calculate after-tax income, you subtract the tax amount from the national income as follows:
National income minus taxes = $300 - $60 = $240.
Following this method, for a business, you would take the operating income from the income statement and subtract the taxes it owes to arrive at NOPLAT.