What does the net income ratio (Ro) represent in assessing property value?

The net income ratio, often referred to as Ro, specifically represents the ratio of net income to effective gross income multiplier. This ratio is a critical metric used in the income approach to property valuation. It helps assess the profitability of an investment property by comparing the net income generated by the property to its overall potential income.

In the context of property assessment, Ro is utilized to estimate a property's value by determining how effectively it generates income compared to its operational expenses. By analyzing this ratio, assessors can make informed judgments about the property’s performance in relation to similar assets in the market.

The other options do not accurately describe the net income ratio. While total revenue and total expenses are relevant to understanding a property's financial health, they do not constitute the net income ratio itself. Similarly, capital gains and losses pertain to the overall returns on investment and not to the operational efficiency of income generation represented by Ro.