Answered: How is net operating profit after tax…

How is net operating profit after tax (NOPAT) different from cash flows provided by (and to) operating activities (CFO)?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter16: Statement Of Cash Flows

Section: Chapter Questions

Problem 14Q: What insight does the calculation of free cash flow provide about the companys cash flow position?

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Question

How is net operating profit after tax (NOPAT) different from cash flows provided by (and to) operating activities (CFO)?

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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