Good video, you can also apply the tax rate to the net non-operating expense, which in Hasbro's example is 60,650 x 0.185 = 11,220 + 49,968 tax expense = 61,188 total operating tax to be deducted from 331,052 to arrive at 269,864. NOPAT = Operating Profit - (Tax Expense + (net non-operating expenses x tax rate)) or as you mentioned, simply Operating Profit x (1- tax rate) although #'s are slightly off due to rounding.
Was that a typo for step 1 finding out operating profit? Because in the video it said $4.5 billion - $1.28 billion = $331 million Did you meant to write $4.2 billion for the expenses? Btw thank you for the video, very well explained and easy to follow!
Thx for your video .. I used your calculation for 2017 and the Tax rate is 0,50 .. because the tax provision was 389,543$ how should I manage that ? should I normalize it ?
NOPAT doesn't take interest into account as its looking at if the company had no debt so what benefit would this metric be for investors who are looking to make an acquisition using debt be besides looking at operational efficiency if any
Thanks for the question. Having a positive tax expense is usually not sustainable so, in this situation, many analysts would prefer to use a normalized tax rate or the "marginal" tax rate for the country in which the firm is incorporated.
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Good video, you can also apply the tax rate to the net non-operating expense, which in Hasbro's example is 60,650 x 0.185 = 11,220 + 49,968 tax expense = 61,188 total operating tax to be deducted from 331,052 to arrive at 269,864.
NOPAT = Operating Profit - (Tax Expense + (net non-operating expenses x tax rate))
or as you mentioned, simply Operating Profit x (1- tax rate) although #'s are slightly off due to rounding.
hello. recently studied finance from engineering. this is very comprehensive, thanks!
why walk away from engineering...
Was that a typo for step 1 finding out operating profit? Because in the video it said $4.5 billion - $1.28 billion = $331 million
Did you meant to write $4.2 billion for the expenses? Btw thank you for the video, very well explained and easy to follow!
Thanks for the video, saving me heaps of time!
Thank you so much
Very effective for BBA students
My hero
Thank you sir
Thank you very much Sir.
Thank you...... helpful..!
Thankyou so much sir
i love u prof
can you make video on how to calculate WACC please. thank you.
Thx for your video .. I used your calculation for 2017 and the Tax rate is 0,50 .. because the tax provision was 389,543$ how should I manage that ? should I normalize it ?
what if EBIT is negative? what is going to be the NOPAT?
NOPAT doesn't take interest into account as its looking at if the company had no debt so what benefit would this metric be for investors who are looking to make an acquisition using debt be besides looking at operational efficiency if any
What if the income taxes is positive ?
Thanks for the question. Having a positive tax expense is usually not sustainable so, in this situation, many analysts would prefer to use a normalized tax rate or the "marginal" tax rate for the country in which the firm is incorporated.