NOPAT from EBIT or from EBITA
McKinsey and Maubaussin say NOPAT is calc'ed from EBITA, but I remember from CFA or other websites it's from EBIT, which one is right?
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EBIT
You gotta account for amortization my G. EBIT
Depends on the nature of the amortization. If it’s a legitimate economic expense (i.e., something where there will be a need to replace the asset over time) then EBIT. However, you should back out something like intangible asset amortization that is just a purchase accounting convention associated with doing M&A.
yeah but...EBIT
But isn’t the PPA related amortization usually tax deductible? If so, then wouldn’t EBIT be used for NOPAT calc?
EBIT
1
This is referring to US GAAP primarily I suspect, under IFRS (so EMEA) you can capitalize some intangibles (i.e, development costs). So depends what accounting principles are used, essentially.
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