Net Operating Income

NOI measures the profitability of core business operations, especially in real estate and business analysis. It excludes non-operating items like interest, taxes, and one-time gains/losses, giving a clear view of operational performance.

Formula

👉 NOI = Total Revenue – Operating Expenses

Where:

• Revenue: Income from business operations (rent, sales, etc.)
• Operating Expenses: Maintenance, salaries, utilities, etc.

(Excludes interest, taxes, depreciation, and capital expenses)

Why NOI Matters

• Evaluates operational efficiency
• Used in property valuation
• Helps compare business performance

NOI vs Net Profit

• NOI: Before interest and taxes
• Net Profit: After all expenses

Common Use (Real Estate)

• Determines property income potential
• Used to calculate capitalization rate (Cap Rate)

"<ul> <li>Rental Income = ₹10 lakh</li> <li>Operating Expenses = ₹4 lakh</li> </ul> <p>👉 NOI = ₹6 lakh</p>"