Which formula represents NOPAT used in ROIC calculations?

The formula that accurately describes NOPAT, or Net Operating Profit After Tax, is the second choice. NOPAT is a critical measure in the context of Return on Invested Capital (ROIC) as it represents the operating profit of a business after accounting for taxes, but before financing costs and other non-operating expenses.

This metric is essential for assessing a company's efficiency and profitability from its core operations without the influence of capital structure. By focusing purely on operational performance, NOPAT provides a clearer view of a company's ability to generate profit from its assets, which directly relates to the investment returns measured by ROIC.

Understanding NOPAT in this way allows investors to evaluate the performance of the company's core business activities regardless of how the company is financed. In contrast, the other options involve either broader or different definitions that do not align with the established definition of NOPAT. Thus, option B most accurately reflects the formula used in ROIC calculations.