Definition

Checking the earnings from day-to-day business before taxes and interest. It shows how well the core business is doing.

What to consider

  • Exclude financing and tax effects.
  • Compare NOI with industry benchmarks.
  • Use it as a key metric in investment decisions.

Real world scenarios

  • A property management company calculates NOI to assess the profitability of its rental properties.
  • An investor in commercial real estate reviews NOI before purchasing a property.
  • A small business uses NOI to compare operational efficiency across different units.

Related terms

Entrepreneurial Finances