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NOPAT calculation

Forums › ACCA Forums › ACCA APM Advanced Performance Management Forums › NOPAT calculation

  • This topic has 0 replies, 1 voice, and was last updated 1 month ago by bryankhai.
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  • April 10, 2023 at 7:51 am #682460
    bryankhai
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    • Topics: 3
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    • ☆

    I’m really confused in calculating NOPAT when reading the EVA technical article.
    https://www.accaglobal.com/gb/en/student/exam-support-resources/professional-exams-study-resources/p5/technical-articles/economic-value-added-part1.html

    What I understand is that
    1)accounting depreciation and amortisation should be added back due to it being a non-cash expense and only economic depreciation and amortisation should be deducted.
    2) For development & research expenditure should be added back as it brings long term value to the company

    What I don’t understand:
    Why do we need to minus the amortisation charge on development & research expenditure in the calculation on NOPAT? Shouldn’t it be added back since its accounting amortisation?

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