Question: When calculating Return on Equity, analysts use NOPAT (net operating profit after tax) in the numerator because: It represents earnings that are still available for

When calculating Return on Equity, analysts use NOPAT ("net operating profit after tax") in the numerator because:

It represents earnings that are still available for both creditors and owners.

NOPAT is not used in the numerator, net income is used in the numerator Owners are compensated with more than just net income and NOPAT reflects the additional return available to just common stockholders.

NOPAT is not used in the numerator, it is used in the denominator

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