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Net
Income |
| Income remaining
after the deduction of expenses from
revenues. This number is found on a
company's income statement and is an
important measure of how profitable the
company is over a period of time. The
measure is also used to calculate earnings
per share. |
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| An individual’s income after deductions,
credits and taxes are factored into gross
income. Deductions and credits are
subtracted from gross income to arrive at
taxable income, which is used to calculate
income tax. Net income is income tax
subtracted from taxable income. |
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| Net income is calculated by starting
with a company's total revenue. From this,
the cost of sales, along with any other
expenses that the company incurred during
the period, is removed to reach earnings
before tax. Tax is deducted from this amount
to reach the net income number. Net income,
like other accounting measures, is
susceptible to manipulation through such
things as aggressive revenue recognition or
by hiding expenses. When basing an
investment decision on net income numbers,
it is important to review the quality of the
numbers that were used to arrive at this
value. |
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Net
Income Analysis |
| Technically, the worksheet is designed
to analyze cash flow based on trade closed
dollars and actual expenses incurred. Many
times, managers may use the same worksheet
and budget future profits based on projected
sales volume and average expenses. As such
the worksheet becomes a type of budget
format. |
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Net Lease |
| A property
lease
in which the lessee agrees to pay all
expenses which are normally associated with
ownership, such as utilities, repairs,
insurance and taxes. |
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| Three categories of
net lease are available; |
- Net
(Single-Net) Lease: an
agreement in which the tenant pays the
rent and certain expenses connected with
the leased premises.
- Net/Net
Lease: an agreement in which
the tenant pays all maintenance and
operating expenses, plus property taxes.
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Net/Net/Net (Triple-Net) Lease:
an agreement in which the tenant pays
maintenance and operating expenses,
property taxes and insurance.
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Net Leasable Area |
| Floor space in a
rental property that is available for lease,
excluding such areas as corridors, equipment
room, and other common areas and should be
clearly differentiated from gross leasable
area that represents the total floor space. |
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Net Operating Income
(NOI) |
| Net Operating Income,
is income derived form real estate
investment after deducting all fixed and
variable expenses from gross operating
income but before deducting annual debt
service and tax liability. |
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Net Present Value |
| The difference between the present value
of cash inflows and the present value of
cash outflows. NPV is used in capital
budgeting to analyze the profitability of an
investment or project. |
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| The sum of present
(discounted) values of future cash flows
netted against the initial investment.
NPV analysis is sensitive to the reliability
of future cash inflows that an investment or
project will yield. |
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| NPV compares the value of a dollar today
to the value of that same dollar in the
future, taking inflation and returns into
account. If the NPV of a prospective project
is positive, it should be accepted. However,
if NPV is negative, the project should
probably be rejected because cash flows will
also be negative. |
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| For real
estate purposes, NOI represents,
income derived from a real estate investment
after deducting all fixed and variable
expenses from gross operating income but
before deducting annual debt service and tax
liability. |
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| NVP Formula:
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Each cash inflow/outflow is discounted
back to its present value (PV). Then they
are summed.
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Net Worth |
|
Total assets less total liabilities. Net
worth, for real estate purposes, represents
total current value of property less all
outstanding liabilities. Put another way, it
is what you own minus what you owe. If you
owe more than you own, you have a negative
net worth. If you own more than you owe you
will have a positive net worth. |
