NOPAT (Net Operating Profit After Tax) is a company's operating profit after applying the theoretical tax rate, abstracting from its financing structure. NOPAT = EBIT × (1 - effective tax rate). It represents the profit generated by the economic assets independently of how they are financed — the cash generation measure used to compute free cash flows to the firm (FCFF) in DCF models. Compared to the WACC, it enables economic value added (EVA) measurement: EVA = NOPAT - WACC × Invested Capital.

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Example: a Swiss company presents EBIT of CHF 3.0 million and an effective tax rate of 14%. NOPAT = CHF 3.0 × (1 - 14%) = CHF 2.58 million. With CHF 20.0 million of invested capital and WACC of 9.5%, EVA = CHF 2.58 - (9.5% × 20.0) = CHF 0.68 million — confirming positive value creation that supports a valuation above book capital.

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Hectelion uses NOPAT as the starting point for free cash flow calculations in DCF models and economic value added analyses.