Is NOPAT and the E_t in residual income model the same thing? If not, what are the differences? Thanks
E_t = NI or Earnings NOPAT = EBIT (1-TR)
Thanks What about accounting adjustments? Do we apply the same adjustments?
I don’t think so, but I’m not sure. I think the big reason for the acct. adjustments in RI is to maintain the clean surplus relationship. But again, not sure.