FFO Definition Wednesday, September 25, 1:05 PM ET
In the world of REITs -- Real Estate Investment Trusts -- often a company will own assets that are able to be depreciated for tax purposes, but that actually appreciate over the course of time. This creates a situation where reported earnings are lower than the ongoing amount of cash generated from operations.
The industry developed the term FFO, which stands for Funds From Operations. FFO is a way for REITs to present an alternative financial measure of their business performance, taking into account depreciation and certain other items. Many REIT investors find that following FFO in addition to EPS gives a more complete picture of a REIT's performance.
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