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How to calculate "Net operating profit"?

Anonymous A

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

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Vlad replied on 03/08/2018
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / 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!

(edited)

Andrea
Expert
replied on 03/09/2018
Former BCG decision round interviewer with 300+ real interviews in 8 years at BCG

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

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