Surplus Ratio
What is it?
The surplus ratio represents the percentage of rental income that exceeds the operating costs for a property. In other words, it shows how much surplus or profit is generated from the property's operations.
How is it calculated?
(Net operating income / Rental income) = Surplus Ratio (%)
Why is it important to follow?
The surplus ratio is a crucial key performance indicator for assessing the financial sustainability and profitability of a property. A high surplus ratio indicates that the property generates significant surplus compared to its operating costs, which is favorable for property owners and investors. It is important because it provides insights into the property's ability to cover costs and generate profit, ultimately influencing its overall financial health.
Created by Homepal
3/13/2024
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