QualityD/A#40
NOPAT Margin expresses how efficiently a company converts capital into earnings. Value investors to find compounders with durable economic moats when NOPAT Margin aligns with the rest of the VMCI.
By Javier Sanz, Founder & Lead AnalystEditorially reviewed
Last updated: Reviewed by: Javier Sanz
Formula
Total Debt / Total Assets
Description
Shows what percentage of total assets are financed by debt. Unlike D/E, this ratio cannot go negative or become infinite, making it more stable for comparison purposes. It provides a clearer picture of how much of the asset base is pledged to creditors.
Interpretation
Below 0.3 is conservative. Above 0.5 means more than half the assets are debt-financed, which increases risk. Compare within industry. Financial institutions naturally carry higher debt-to-assets ratios.
Related metrics: Return on Equity (ROE), Return on Assets (ROA). (Updated 2026)
Further Reading
- SEC EDGAR primary filings on NOPAT Margin- Primary source filings used to calculate NOPAT Margin.
FAQ
How is NOPAT Margin calculated?+
NOPAT Margin uses the formula: Total Debt / Total Assets. compare against sector median on /screener with the Sector filter applied. ValueMarkers refreshes the calculation within 24 hours of each new SEC filing using SEC EDGAR 10-K + 10-Q filings (segment-level disclosures).
What is a good NOPAT Margin value by sector?+
There is no single 'good' value for NOPAT Margin — context is sector-driven. compare against sector median on /screener with the Sector filter applied. The /screener exposes sector-relative percentiles for NOPAT Margin on every ticker, so you can compare against the sector median rather than the broad-market median.
Which investors use NOPAT Margin?+
Charlie Munger, Joel Greenblatt, Terry Smith cite NOPAT Margin as a key input to to find compounders with durable economic moats. The academic anchor is Greenblatt (2005) Magic Formula and Mauboussin (2014). ValueMarkers weights this within the Quality pillar of the VMCI score (30% of total).
What are the limitations of NOPAT Margin?+
NOPAT Margin can mislead in asset-light businesses where conventional capital ratios mislead. Pair NOPAT Margin with at least two cross-checks from other VMCI pillars — for example, free cash flow trend, balance-sheet quality, and earnings consistency — before drawing a single-metric conclusion.
Where can I see live NOPAT Margin data?+
Visit any /stock/[ticker] page on ValueMarkers to see live NOPAT Margin data, sector percentiles, and the VMCI composite score that integrates NOPAT Margin with 119 other indicators across 100,000+ stocks. The free /screener exposes NOPAT Margin as a filterable column.
Related Quality Indicators
Return on Equity (ROE)Op Margin
Return on Equity measures how efficiently a company converts capital into earnings.
Return on Assets (ROA)Net Margin
Return on Assets is the metric used to how efficiently a company converts capital into earnings.
Return on Invested Capital (ROIC)EBITDA Margin
Return on Invested Capital measures how efficiently a company converts capital into earnings.
Return on Capital Employed (ROCE)FCF Margin
Return on Capital Employed is the metric used to how efficiently a company converts capital into earnings.
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