In the Debt Coverage Ratio, what does NOI stand for?

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Multiple Choice

In the Debt Coverage Ratio, what does NOI stand for?

Explanation:
Net Operating Income is what NOI stands for in this context. It measures the income a property generates from its normal operations after subtracting operating expenses, but before debt service, taxes, depreciation, and amortization. In the Debt Coverage Ratio, NOI is used in the formula DCR = NOI divided by annual debt service, so it reflects how much cash flow is available to cover loan payments. The other phrases aren’t standard real estate terms, so they don’t describe the income figure lenders rely on for debt coverage.

Net Operating Income is what NOI stands for in this context. It measures the income a property generates from its normal operations after subtracting operating expenses, but before debt service, taxes, depreciation, and amortization. In the Debt Coverage Ratio, NOI is used in the formula DCR = NOI divided by annual debt service, so it reflects how much cash flow is available to cover loan payments. The other phrases aren’t standard real estate terms, so they don’t describe the income figure lenders rely on for debt coverage.

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