1. What is Net Operating Income (NOI)?

Net Operating Income (NOI) is a financial metric that represents a company's operating income after operating expenses are deducted from operating revenues. 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:

• \( Revenue \) — Total operating revenue (USD)
• \( Operating Expenses \) — All costs associated with operations (USD)

Explanation: The formula calculates the profit generated from a company's normal business operations, excluding taxes and interest expenses.

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's particularly important in real estate and property management.

4. Using the Calculator

Tips: Enter revenue and operating expenses in USD. Both values must be non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's included in operating expenses?
A: Operating expenses include rent, utilities, payroll, insurance, maintenance, but exclude taxes, interest, depreciation, and amortization.

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

Q3: Why is NOI important in real estate?
A: NOI helps evaluate a property's profitability before financing and tax considerations, making it useful for comparing properties.

Q4: Can NOI be negative?
A: Yes, if operating expenses exceed revenue, indicating operational inefficiency.

Q5: How often should NOI be calculated?
A: Typically calculated monthly for management purposes and quarterly/annual for financial reporting.