How do you interpret Net opearting profit after tax? What is the performance on
ID: 2813840 • Letter: H
Question
How do you interpret Net opearting profit after tax? What is the performance on the above calculations based on your analysis?
a. 2016 2015 Income from operations $ 20,182.00 $ 18,161.00 Provision for income taxes $ 2,953.00 $ 6,314.00 Other Income (expense) $ (431.00) $ 346.00 a. NOPAT 2016 2015 20182-(2953+(431*.37)) $17,069.53 18161-(6314+(-346*0.37)) $ 11,975.02How do you interpret Net opearting profit after tax? What is the performance on the above calculations based on your analysis?
Explanation / Answer
Net operating profit after tax is similar to EBIT adjusted for taxes.
Now as we can see that income from operations and consequently NOPAT is increasing from 2015 to 2016. This means that company has become more operationally efficient. Also, the company may have changed the capital strucuture to its advantage as even after a considerable increase in operating income, it has reduced the tax liability to less than half. Therefore company is going strong.
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