What is the formula for calculating the Operating Expense Ratio (OER)?

The Operating Expense Ratio (OER) is a financial metric that analyzes the operational efficiency of a property by comparing its operating expenses to its revenue. The correct formula for calculating OER is represented by the relationship between operating expenses and total revenue.

The formula is calculated by dividing operating expenses by total revenue, which highlights what portion of the income is consumed by operational costs. Thus, A is the accurate representation of the OER formula: OER = Operating Expenses ÷ Total Revenue.

Option B, which refers to OER as 1 - NIR (Net Income Ratio), focuses instead on net income, which is not directly related to calculating the OER. The OER specifically pertains to operating expenses rather than net income or net income ratios. Therefore, option A is indeed the correct interpretation of how to compute the Operating Expense Ratio, emphasizing its role in assessing the efficiency of property management and expenses relative to the revenue generated.