Net Income = Gross Operating Income – Total ExpensesĪfter accounting for debt and tax provision, your bottom line is a net loss of $25,000 for the quarter. If we use the same information from the previous example: Since debt expenses can turn positive net operating income into a net loss, looking at operating income is especially useful for young SaaS companies relying on debt financing. While taking away operating expenses from gross revenue gives you the net operating income, net income refers to the difference between all business revenue and all business expenses. In other words, it doesn’t include income from non-core business activities, such as the sale of an asset, rental income, or investment earnings. When looking at income sources, net operating income only uses sales revenue. Amortization comes with debt and isn’t included in NOI calculations. Amortization: This refers to the accounting practice of spreading out loan payments over time.Examples include buying new machinery, office furniture, and maintenance. ![]()
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