NOPLAT available, understand, finance, created, 2011

ruchita

NOPLAT
Posted by: xx8801 (IP Logged)
Date: March 15, 2011 05:02PM


NOPLAT
I don’t get what this is showing me.
I understand that we just removing the tax shield we created in the I/S, but I don’t understand the logic why?

NI – 2296
Net Int after tax – 417
Unlevered NI – 2713
Change in Deferred taxes 19
NOPLAT – 2732
Interest exp is 642
Tax rate is 35%

If NOPLAT shows us the cash flow available to all providers of finance. My logic is to add the int exp to NI? Otherwise isn’t NOPLAT suggesting that only 417 is available to debt holders? When we actually pay them 642? Their Individual tax rate could differ from the corporate tax rate?

Can anyone help explain this to me?

ningning1984

Corp pays the debtholders 642 but the net cost to the corp is 642 (1-0.35) = 417.