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QuickBooks Net Operating Income (Cash)

Net Operating Income (Cash) is a profitability metric that reflects the income generated by a business's operations after deducting operating expenses and taxes but before deducting interest and other non-operating expenses.

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  • Tech details

What Is Net Operating Income

Net Operating Income (NOI) is a financial metric used to measure the profitability of an income-generating property or business.
It’s primarily used in real estate investing and property management, where it represents the income a property generates after deducting all operating expenses.

How to Calculate Net Operating Income

Net operating income is calculated by subtracting operating expenses from the total income a specific property or business generates.
In real estate, operating expenses typically include property taxes, insurance, maintenance and repairs, utilities, management fees, and other costs directly associated with operating the property.

Here is a simple formula you can follow:

NOI = Total Income – Operating Expenses

Let’s say you own an apartment building and want to calculate its net operating income for the year.
The apartment building generates $200,000 in rental income for the year and the operating expenses amount to $80,000.

Using the formula, we can calculate that the net operating income for the apartment building is $120,000 for the year.

It’s important to note that this metric does not take into account financing costs such as mortgage payments or income taxes. These factors are excluded from the calculation to focus solely on the property’s operational performance and its ability to generate income.

What Is a Good Net Operating Income?

The definition of a “good” net operating income depends on factors such as the industry, location, and specific circumstances of the property or business.
However, there are some general benchmarks that can be considered when evaluating NOI across different industries.

Note that these figures are approximate and can vary significantly based on the factors we mentioned above.

In the real estate industry, it’s important to consider the type of property.

For example, in the commercial real estate sector, a good net operating income is typically considered to be around 70% to 75% of the property’s gross operating income. In other words, the operating expenses account for approximately 25% to 30% of the total income generated.
For multifamily properties such as apartment buildings, a good net operating income is often considered to be around 50% to 60% of the gross rental income.

In the retail business, a good net operating income can vary depending on factors such as the type of retail operation (e.g., small storefront, shopping mall), location, and the specific retail segment. Generally, a good NOI is from 15% to 30% of the gross sales revenue.

How to Increase Net Operating Income

Effectively managing operating expenses is one of the best ways for businesses to increase net operating income – but it’s not the only one.

In the competitive landscape, it’s important to think creatively and strategically, so we prepared some tips to help you do just that:

  • Identify opportunities for new revenue streams: Make sure you’re always on the lookout for new opportunities to diversify and increase revenue streams. For example, this can include exploring partnerships with complementary businesses or introducing new services that align with customer demands. Perhaps there’s a good opportunity for hosting events or conferences, renting out space during off-peak hours, or offering some sort of consulting or training services.
  • Optimize energy efficiency: How much are your utility costs? If it’s above an industry standard, consider implementing energy-efficient practices and technologies to reduce these costs. This can include installing energy-saving appliances, LED lighting, smart thermostats, and implementing recycling or waste reduction programs.
  • Monetize unused space: Identify any unused space within your property or business and find ways to monetize it. This could involve renting out excess storage space, offering co-working spaces to other organizations, or leasing parking spaces to non-occupants. This can help you easily generate more operating income without making any significant investments.

More resources to help you improve:

This metric has one or more equivalents:

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How to track Net Operating Income (Cash) in Databox?

Databox is a business analytics software that allows you to track and visualize your most important metrics from any data source in one centralized platform.

To track Net Operating Income (Cash) using Databox, follow these steps:

  1. 1
    Connect QuickBooks that contains the metric you want to track
  2. 2
    Select the metric you want to track from the list of available metrics
  3. 3
    Drag and drop the selected metric onto your dashboard
  4. 4
    Watch your dashboard populate in seconds
  5. 5
    Put Net Operating Income (Cash) on the Performance screen
  6. 6
    Get Net Operating Income (Cash) performance daily with Scorecards or as a weekly digest
  7. 7
    Set Goals to track and improve performance of Net Operating Income (Cash)
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QuickBooks Net Operating Income (Cash) included in Dashboard Templates 1

  • Live view

    Quickbooks Income & Expenses Cash Overview

    Quickbooks dashboard template provides you with insights about cash flow, bank accounts, sales and expenses enterred in Quickbooks to stay on top of your business.

    QuickBooks

Basics

  • Description
    Net Operating Income (Cash) is a profitability metric that reflects the income generated by a business's operations after deducting operating expenses and taxes but before deducting interest and other non-operating expenses.
  • Category
    Accounting
  • Subcategory
    Income
  • Date Added
    2016-05-20
  • Default Format
    PrefixCurrency
  • Cumulative Support
    Yes
  • Units
    Yes
  • Granularities
    daily, weekly, monthly, yearly, quarterly, allTime
  • Favorable Trend
    increasing
  • Historical Data
    Yes
  • Changing historical data
    Yes
  • Forecast Support
    Yes
  • Benchmark Support
    Yes
  • Media Support
    No
  • Dimension
    N/A
  • Metric Type
    general Learn more
  • API Endpoint
    https://quickbooks.api.intuit.com/v3/company/{realmId}/reports/ProfitAndLoss

Questions? We've got answers.

  • What is the difference between operating income vs. net income?

    Operating income refers to the profit generated from a company’s core business operations, excluding non-operating expenses such as interest and taxes.
    Net income, on the other hand, represents the total profit or earnings of a company after deducting all expenses, including non-operating items. It includes operating income as well as additional income or expenses outside the core operations.

  • Is net operating income same as EBIT?

    Yes, net operating income is the same as EBIT (Earnings before Interest and Taxes). Both terms refer to a company’s income before deducting interest expenses and income taxes.

  • What is the difference between Net Operating Income vs. Gross Operating Income?

    Gross operating income refers to the total revenue generated by a property or business before deducting operating expenses.
    Net operating income is gross operating income minus operating expenses.

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