what is net operating profit less adjusted taxes noplat 
net operating profit less adjusted taxes noplat is a financial metric that calculates a firm s operating profits after adjusting for taxes by using operating income or income before taking interest payments into account noplat serves as a better indicator of operating efficiency than net income 1understanding net operating profit less adjusted taxes noplat net operating profit less adjusted taxes noplat is a company s earnings before interest and taxes ebit after making adjustments for deferred taxes the tax is adjusted to reflect the un leveraged profits of the firm without taking into account the effects of tax debt in effect this metric is a profit measurement that includes the costs and tax benefits of debt financing 21the effects of a firm s capital structure are excluded from this profit measurement tool by removing the monetary costs of equity and debt from the noplat calculation since noplat minus cost of capital equals a firm s economic profit noplat is also used to calculate economic value added eva the eva is a measure of management performance to compare economic profit to the total cost of capital 3using noplat an analyst or investor is able to look into the profits generated by a company s core operations after subtracting the income taxes related to the core operations and adding back in taxes that the company had overpaid during the accounting period any income generated from non operating assets are not included however profit from invested capital is added operating income the company s profit before interest and taxes shows what the company would earn if it had no debt no interest expense 4 since only operating income is used the evaluation of a business operating efficiency using noplat is not impacted by how much leverage the company has or how much loans it has on its balance sheet given that debt servicing that is the interest used to finance debt negatively impacts a firm s bottom line and thus decreases its tax expense example of noplatnoplat for a firm is calculated as operating income x 1 tax rate 1 for example let s compare the net operating profit less adjusted taxes for bed bath beyond inc bbby for the fiscal years ended march 3 2018 and feb 25 2017 usd in thousands 20182017revenue 12 349 301 12 215 757cost of goods sold7 906 2867 639 407gross margin4 443 0154 576 350selling general and admin expenses3 681 6943 441 140operating income or ebit761 3211 135 210interest expense65 66169 555income tax 35 57 and 33 52 respectively 270 802380 547net income 424 858 685 108noplat761 321 x 1 0 3557 490 519 1 135 210 x 1 0 3352 754 633source u s securities and exchange commission56the increase in operating costs year over year led to a decrease in operating profits from 2017 to 2018 for bed bath beyond this in turn decreased noplat generally a company that operates efficiently should have a positive nopat an increase in nopat can translate into a higher stock price for a publicly traded company noplat is used extensively in mergers and acquisitions m a discounted cash flow dcf and leveraged buyout lbo models because it enables the calculation of an investment s free cash flow fcf 1