Net Operating Income (NOI) and Cash Flow
Net operating income is the revenue from a property minus recurring operating expenses. Cash flow is net operating income minus debt service, depreciation, income tax, etc. Net cash flow tells you how much operating cash moves in and out for a given period of time. Net income includes all expenses.
Understanding NOI and Cash Flow
NOI measures the amount of cash flow after all expenses. Investors use NOI to determine whether a property is a good investment. Cash flow tells you how much fuel you’re burning and how far you can go.
The Difference Between Cash Flow and Net Operating Income
Cash flow from operating activities is the total cash that a company generates, while net income is the revenue minus various expenses such as business operations costs, depreciation, taxes, salaries, interest, and other miscellaneous costs. Cash flows from operating activities makes adjustments to net income and excludes non-cash items like depreciation and amortization, which can misrepresent a company’s actual financial position.
Comparison of Operating Cash Flow and Net Income
Net income is the amount of money that a company takes in through sales minus all its expenses. Operating cash flow, on the other hand, is the cash generated by operations that is available to pay expenses.