Schedule mock interviews on the Meeting Board, join the latest community discussions in our Consulting Q&A and find like-minded Interview Partners to connect and practice with!
Back to overview

How to calculate "Net operating profit"?

Hi,

I was just wondering how to calculate the net operating profit of a firm. During university I only learned how to calculate the operating cash flow and do not know if there is a difference between these two?

I calculate operating cash flows like this:

Revenue

- Costs

- Depreciation

= EBIT

- TAX

= EBIAT

+ Depreciation

= Operating cash flows

Is this correct so far? I read that net operating profit is like EBIAT because in a calculation I read online they did not add depreciation again.

Thanks for helping me to understand this

2
4.1k
26
Be the first to answer!
Nobody has responded to this question yet.
Top answer
Vlad
Coach
edited on Mar 08, 2018
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

Net operating profit (Or net Income) = EBIT - interest income - income taxes

You'll don't need EBIAT formula on the case interviews. Net income will be useful

Best!

on Mar 09, 2018
Hi, I think interest income can be generalized to "non-operating profits", while it can be before-tax or after-tax. If after-tax, I normally do a theoretical tax on the operating income only
Vlad
Coach
on Mar 09, 2018
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School
Angelo, that's why I am subtracting it in line with taxes. Btw, you will never have interest income in consulting cases
Deleted user
on Mar 09, 2018

Explanation is correct, wanted to reassure that unless you were a financial analyst or in banking or consulting for the past few years this will likely not be asked at an MBB interview and you can ask for guidance on how to calculate.

hope it helps,

andrea

0
Similar Questions
Consulting
Mail format for 2+ names at McKinsey?
on Jul 15, 2024
Global
1
2.1k
34
1 Answer
2.1k Views
Consulting
McKinsey Case Interview
on Jul 27, 2024
Global
7
2.8k
42
7 Answers
2.8k Views
Consulting
Open ended cases with "no objectives" or "multiple objectives"?
on Aug 06, 2024
Global
4
1.1k
41
4 Answers
1.1k Views
Consulting
Which strategy to adopt for a second time case prep for MBBs?
on Aug 10, 2024
Global
4
1.1k
30
4 Answers
1.1k Views
Consulting
Prolonged Interview Process and Lack of Clarity – How to Proceed?
on Sep 16, 2024
Global
4
1.1k
58
4 Answers
1.1k Views
Show more