Question

Use the information to answer the following questions. XXX, Inc. Balance Sheet 2018 2017 2018 2017 Cash 200 450 Accounts Payable 600 700 Accounts Receivable 2500 3600 Accruals Notes Payable 500 900 1200 1000 Inventory 2000 3200 Total CL 2000 2900 Total CA 4700 7250 Long Term Debt 3000 3970 Gross Fixed Assets 6500 7200 Common Stock 3000 3100 Less Acc. Depreciation 1200 1000 Retained Earnings 2000 3480 Net Fixed Assets 5300 6200 Total Equities 5000 6580 Total Assets 10000 13450 Total Liab. & O.E. 10000 13450 XXX, Inc. Income Statement 2018 EBITDA 3500 Depreciation 200 EBIT 3300 Interest Expense 1300 EBT 2000 Taxes 700 Net Income 1300 Dividend Paid 3160 What is the 2018 Net Operating Profit After Taxes (NOPAT)?

Answer 1

$2,145

Explanation:

For the computation of Net Operating Profit After Taxes (NOPAT) first, we need to compute the tax rate which is shown below:-

Tax rate = Tax expense ÷ Earnings before tax

= 700 ÷ 2,000

= 35%

Net Operating Profit After Taxes (NOPAT) = EBIT × (1 - tax rate)

= 3,300 × (1 - 35%)

= $2,145

Therefore for computing the Net Operating Profit After Taxes (NOPAT) we simply applied the above formula.