Net Operating Income: What It Is and How It's Used

What Is Net Operating Income?

By Anders Bylund – Updated Sep 6, 2025 at 3:19 PM

Key Points

Net operating income (NOI) measures a company's profit from its core operations before taxes and interest.
A high NOI indicates efficient management and controlled costs; a low NOI suggests rising expenses are impacting profits.
Tracking changes in NOI over time can help investors assess a company's operational efficiency compared to its peers.

Net operating income is an important financial term -- one often misunderstood. There are many different sorts of income (also known as profits) on any company's income statement, and they all serve different purposes in your financial analysis. So let's get specific and dig into the details of net operating income, or NOI.

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A businessperson reviewing an income statement. — Image source: Getty Images.

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Earnings Before Interest and Taxes (EBIT)

A financial measure that shows a company’s profitability by evaluating earnings from operations, excluding interest and tax expenses.

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Scissors cutting a postcard that reads Cost in half. — Image source: Getty Images.

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UPS NOI (net operating income) and EBIT (earnings before interest and taxes). Data source: UPS 10-K filing for 2022. YOY = year over year.
UPS	2022	2021	YOY Change
Revenue	$100,338	$97,287	3.1%
Compensation and benefits*	$47,781	$46,707	2.3%
Repairs and maintenance	$2,515	$2,443	2.9%
Depreciation and amortization	$3,188	$2,953	8.0%
Purchased transportation*	$17,653	$19,058	-7.4%
Fuel*	$6,018	$3,847	56.4%
Other occupancy*	$1,818	$1,698	7.1%
Other expenses	$8,271	$7,771	6.4%
NOI (only operating costs highlighted with asterisks)	$40,836	$41,337	-1.2%
Costs excluded from NOI	$13,974	$13,167	6.1%
EBIT (includes all operating costs)	$13,094	$12,810	2.2%

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FedEx NOI (net operating income) and EBIT (earnings before interest and taxes). Data source: FedEx 10-K filing for 2022. YOY = year over year.
FedEx	2022	2021	YOY Change
Revenue	$45,814	$42,078	8.9%
Salaries*	$16,435	$16,217	1.3%
Purchased transportation*	$6,322	$5,744	10.1%
Rentals and landing fees*	$2,568	$2,296	11.8%
Depreciation and amortization	$2,007	$1,946	3.1%
Fuel*	$4,418	$2,461	79.5%
Maintenance and repairs	$2,120	$2,228	-4.8%
Business realignment costs	$278	$116	139.7%
Intercompany charges	$1,997	$1,996	0.1%
Other	$6,747	$6,264	7.7%
NOI (only operating costs highlighted with asterisks)	$16,071	$15,360	4.6%
Costs excluded from NOI	$13,149	$12,550	4.8%
EBIT (includes all operating costs)	$2,922	$2,810	4.0%

FedEx increased its net operating income year over year, actually outperforming its EBIT gains. Mainly, the company canceled out the higher fuel costs and airport charges by issuing lower salary increases to its staff than UPS did to theirs.

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Here, the NOI tool helped us highlight how UPS and FedEx approached the challenges of 2022 in different ways. FedEx found ways to increase its net operating income, even in a tight economy with inflation-boosted costs. Its reliance on limited pay increases could lead to lower NOI in the long run if the slow salary increases result in unmotivated workers.

So FedEx investors should keep an eye on the long-term NOI development. But so far, so good -- FedEx outperformed UPS on the net operating income line in 2022.

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About the Author

Anders Bylund is a contributing Motley Fool media and technology analyst covering semiconductors, cloud computing, internet infrastructure, quantum computing, and streaming media. Previously, Anders was a systems administrator for Nielsen Technology and CSX, gaining hands-on experience with enterprise-class systems. He was also a freelance writer for Ars Technica, TIME, USA Today, CNN, WIRED, and AOL's Daily Finance. He holds a bachelor’s degree in English and a master’s degree in library and information sciences from Florida State University. He believes in coyotes and time as an abstract.

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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends FedEx and United Parcel Service. The Motley Fool has a disclosure policy.