Intermediate45 minutes9 terms

Asset Turnover & Efficiency: Key Terms

This curated collection offers key terms that might be helpful when exploring asset efficiency and performance in real estate. It provides clear explanations for commonly referenced concepts related to how effectively assets generate revenue, supporting your investment analysis.

Term Collection

Depreciation

Depreciation in real estate is an income tax deduction allowing investors to recover the cost of an income-producing property over its useful life, excluding land value, thereby reducing taxable income.

Intermediate13-14 min

Fixed Assets

Fixed assets are long-term tangible assets, such as land, buildings, and equipment, that a real estate investor owns and uses for more than one year to generate income, rather than for immediate sale.

Beginner3 min

Net Operating Income

Net Operating Income (NOI) is a key real estate metric representing a property's annual income after deducting all operating expenses, but before accounting for debt service, income taxes, and capital expenditures.

Intermediate11-12 min

Return on Assets

Return on Assets (ROA) is a financial ratio that indicates how profitable a company or investment property is in relation to its total assets. It measures management's efficiency in using assets to generate earnings, irrespective of financing structure.

Intermediate3 min

Asset Utilization

Asset utilization in real estate measures how efficiently an investment property generates revenue or achieves its operational objectives relative to its full capacity, indicating efficiency in resource deployment.

Intermediate2 min

Fixed Asset Turnover Ratio

The Fixed Asset Turnover Ratio measures how efficiently a company uses its fixed assets, such as property, plant, and equipment, to generate sales revenue. It indicates the revenue generated for every dollar invested in fixed assets.

Intermediate5-6 min

Capital Expenditures

Capital Expenditures (CapEx) are significant funds spent by a real estate investor to acquire, upgrade, or extend the useful life of a property, rather than for routine maintenance or operating expenses. These investments enhance the property's value and are typically depreciated over time for tax purposes.

Intermediate14-15 min

Capital Intensity

Capital intensity measures the amount of capital required to produce a unit of output or generate revenue, indicating how asset-heavy an investment or business is.

Intermediate2-3 min

Wealth Management

Wealth management is a comprehensive financial service that combines financial planning, investment portfolio management, and other aggregated financial services to manage the wealth of high-net-worth individuals and families.

Intermediate8 min