Accounting Period

An accounting period is the span of time a financial statement covers, such as a month, a quarter or a fiscal year. NOI is almost always quoted for a twelve-month period, because cap rates, lender ratios and appraisals all assume an annual figure.

A shorter period can mislead. A single month might carry a roof repair or a missed rent payment that would look minor over a year. Multiply one quiet summer month by twelve and the NOI can come out thousands too high.

Two annual periods get used in practice. Trailing twelve months looks back at what the property actually did. A pro forma year looks ahead at what it should do at market rent and normal expenses. Label which one you are quoting, since buyers price them differently.