1. What is Net Operating Income?

Net Operating Income (NOI) is a financial metric that represents a company's operating income after operating expenses are deducted from gross income. It's a key measure of a company's profitability from its core operations.

2. How Does the Calculator Work?

The calculator uses the NOI formula:

Where:

• Gross Income — Total revenue from all sources before expenses
• Operating Expenses (OpEx) — Costs required to run the business operations

Explanation: The formula subtracts all operating expenses from the total income to determine the profit generated from core business operations.

3. Importance of NOI Calculation

Details: NOI is crucial for assessing a company's operational efficiency, comparing performance across periods, and making investment decisions. It excludes non-operating income and expenses to focus on core business profitability.

4. Using the Calculator

Tips: Enter gross income and operating expenses in USD. Both values must be positive numbers. The calculator will automatically compute the NOI.

5. Frequently Asked Questions (FAQ)

Q1: What's included in operating expenses?
A: OpEx typically includes rent, utilities, salaries, maintenance, insurance, and other costs directly related to business operations.

Q2: How is NOI different from net income?
A: NOI focuses only on operational results, while net income includes all revenues and expenses (including taxes, interest, and non-operational items).

Q3: Why is NOI important in real estate?
A: In real estate, NOI helps evaluate property performance before financing and tax considerations, making it useful for valuation and comparison.

Q4: Can NOI be negative?
A: Yes, if operating expenses exceed gross income, the NOI will be negative, indicating operational losses.

Q5: How often should NOI be calculated?
A: Typically calculated monthly, quarterly, and annually for financial reporting and performance analysis.