After-Tax Operating Income (ATOI)

What is After-Tax Operating Income (ATOI)?

After-tax operating income (ATOI) is a company's operating income after taxes. ATOI is very similar to net operating profit after tax (NOPAT)

How Does After-Tax Operating Income (ATOI) Work?

The formula for ATOI is:

ATOI = Gross Revenue - Operating Expenses - Depreciation - Taxes

Let's assume Company XYZ reported the following information for the fiscal year:

Using the formula and the information above, we can calculate that Company XYZ's ATOI was:

$1,000,000 - $500,000 - $300,000 - $100,000 - $10,000 = $90,000

Why Does After-Tax Operating Income (ATOI) Matter?

ATOI is a non-GAAP measure, meaning that what is included and excluded differs by company and industry. Thus, the definition of a 'high' or 'low' ATOI should be made within this context.

ATOI is a measure of a company's operating efficiency because it only takes into account expenses that are directly related to ongoing business operations. The ATOI does not include interest expense, which is influenced by the company's leverage decisions, nor does it include dividends or nonrecurring items.