Compute Net Operating Profit after TaxRefer to the balance sheet information below for Home Depot.$ millionsFeb. 3, 2019Jan. 28, 2018Operating assets$27,446$26,607Nonoperating assets1,1562,337Total assets$28,602$28,944Operating liabilities$10,841$10,431Nonoperating liabilities18,98117,568Total liabilities$29,822$27,999Net sales$70,332 Operating expense before tax60,237 Net operating profit before tax (NOPBT)10,095 Other expense633 Income before tax9,462 Tax expense2,233 Net income$7,229 Assume a statutory tax rate of 22%.a. Compute NOPAT for the year ended Feb. 3, 2019 using the formula: NOPAT = Net income + NNE Net incomeNNENOPAT AnswerAnswer b. Compute NOPAT for the year ended Feb. 3, 2019 using the formula: NOPAT = NOPBT − Tax on operating profit NOPBTTax on operating profitNOPAT AnswerAnswer

Net operating profit after tax (NOPAT) It is a financial measure that shows how well a company performed by its core operations and net of taxes. NOPAT is frequently used in economic value-added calculations and is a more accurate look at operating efficiency for leveraged companies.a) NOPAT = Net income + NNE Particulars Amount ($) Net income $7229 Add:- Interest expenses (After tax) 633×(1-0.22) $494 NOPAT $7723b) NOPAT = NOPBT − Tax on operating profit Particulars Amount ($) Net operating profit before taxes $10095 Less:- Tax for income taxes ($2233 + (633×22%)) = $2233 + 139 $2372 NOPAT $7723

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Compute Net Operating Profit after Tax

Refer to the balance sheet information below for Home Depot.

$ millions	Feb. 3, 2019	Jan. 28, 2018
Operating assets	$27,446	$26,607
Nonoperating assets	1,156	2,337
Total assets	$28,602	$28,944
Operating liabilities	$10,841	$10,431
Nonoperating liabilities	18,981	17,568
Total liabilities	$29,822	$27,999
Net sales	$70,332
Operating expense before tax	60,237
Net operating profit before tax (NOPBT)	10,095
Other expense	633
Income before tax	9,462
Tax expense	2,233
Net income	$7,229

Assume a statutory tax rate of 22%.

a. Compute NOPAT for the year ended Feb. 3, 2019 using the formula: NOPAT = Net income + NNE

	Net income	NNE	NOPAT
	Answer	Answer

b. Compute NOPAT for the year ended Feb. 3, 2019 using the formula: NOPAT = NOPBT − Tax on operating profit

NOPBT

Tax on operating profit

NOPAT

Answer

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