This is incorrect. NOPAT refers to a company’s cash flows before mandatory debt repayments, recurring capex, and interest expenses. It’s used to compare companies without considering differences in capital structure; it is not a good measure of how much the company can afford to pay in dividends. Many companies that file for bankruptcy have positive NOPAT and yet strictly 0 equity value. You’re thinking of levered free cash flow.
I stand corrected. Although the broader point about share prices noisily approximating a discounted expected cash flow which can be added or multiplied still holds
This is incorrect. NOPAT refers to a company’s cash flows before mandatory debt repayments, recurring capex, and interest expenses. It’s used to compare companies without considering differences in capital structure; it is not a good measure of how much the company can afford to pay in dividends. Many companies that file for bankruptcy have positive NOPAT and yet strictly 0 equity value. You’re thinking of levered free cash flow.
I stand corrected. Although the broader point about share prices noisily approximating a discounted expected cash flow which can be added or multiplied still holds