Fundamental Data - Accuracy Matters (NOPAT & Invested Capital) - John Rotonti - 15 September 2023

20 Sept 2023 · 1 min

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1:11

John Rotonti explains why NOPAT and invested capital matter for valuation. These two metrics drive return on invested capital, free cash flow, and economic value added. New Constructs built its platform around getting these numbers right.

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Corporate finance and valuation are based off of 2 metrics, NOPAT and invested capital. And that's really not up for debate. The platform that you've built, New Constructs, is set up around those 2 metrics. It's built from the ground up. On the 2 metrics that matter most to corporate finance and valuation. And the reason they're the 2 most important metrics is because NOPAT and invested capital, those 2 metrics are used to calculate return on invested capital, free cash flow, and economic value added or economic profit. Those 2 metrics are used to calculate the 3 most important metrics used to determine intrinsic value or intrinsic value growth. And so if you don't get NOPAT and invested capital right, you cannot get Return on invested capital, free cash flow, and economic value added, right?