Because property depreciation doesn’t reflect real changes in value, REITs report FFO (as defined by Nareit) instead of relying on earnings. P/FFO is the REIT equivalent of the P/E ratio.
How to use the FFO Calculator – Funds From Operations
- Net income
- Depreciation
- Amortization
- Losses on property sales
- Gains on property sales
- Shares outstanding
- Share price
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter net income, depreciation, amortization, gains and losses on property sales, shares outstanding and the share price.
Tips
- Use consistent periods (a year or a quarter) for flow figures and period-end values for balances.
- Average opening and closing balances when a ratio mixes a flow with a stock.
- Benchmark against competitors in the same industry.
- Read the ratio together with others – profitability, liquidity and efficiency tell different stories.
Common mistakes to avoid
- Using sales instead of cost of goods sold for inventory ratios.
- Mixing gross, operating and net profit.
- Ignoring one-off items that distort a single year.
Inputs explained
| Field | What to enter |
|---|---|
| Net income | Amount in your currency |
| Depreciation | Amount in your currency |
| Amortization | Amount in your currency |
| Losses on property sales | Amount in your currency |
| Gains on property sales | Amount in your currency |
| Shares outstanding | A number |
| Share price | Amount in your currency |
What each result means
- Funds from operations (FFO) = [Net income] + [Depreciation] + [Amortization] + [Losses on property sales] – [Gains on property sales]
- FFO per share = [Funds from operations (FFO)]÷[Shares outstanding]
- Price to FFO = [Share price]÷[FFO per share]
Example values
How the main result changes when Net income changes and everything else stays at the example values above:
| Net income | Funds from operations (FFO) |
|---|---|
| 25,000,000 | 55,000,000 |
| 37,500,000 | 67,500,000 |
| 50,000,000 | 80,000,000 |
| 62,500,000 | 92,500,000 |
| 75,000,000 | 105,000,000 |
| 100,000,000 | 130,000,000 |
Formula
FFO = net income + depreciation + amortization + losses on sales − gains on salesFFO per share = FFO ÷ sharesP/FFO = share price ÷ FFO per shareWorked example
Inputs — Net income: $50,000,000; Depreciation: $30,000,000; Amortization: $5,000,000; Losses on property sales: $1,000,000; Gains on property sales: $6,000,000; Shares outstanding: 40,000,000; Share price: $30.
Results — Funds from operations (FFO) = $80,000,000.00; FFO per share = $2.00; Price to FFO = 15.
Frequently asked questions
What is FFO?
Funds from operations – a REIT's cash earnings measure.
Why add back depreciation?
Real estate often holds or gains value despite accounting depreciation.
What is a good P/FFO?
It varies by sector; 12–20 is common.
What formula does the FFO Calculator – Funds From Operations use?
FFO = net income + depreciation + amortization + losses on sales − gains on sales.