FFO is calculated by adding depreciation, amortization, and losses on sales of assets to earnings and then subtracting any gains on sales of assets and any interest income. ... The FFO-per-share ratio should be used in lieu of earnings per share (EPS) when evaluating REITs and other similar investment trusts.

How is FFO calculated for reits?

Though no one official measure exists, a AFFO formula is along the lines of AFFO = FFO + rent increases - capital expenditures - routine maintenance amounts.

What is a good FFO ratio?

The higher the FFO to total debt ratio, the stronger the position the company is in to pay its debts from its operating income, and the lower the company's credit risk. ... For corporations, the credit agency Standard & Poor's considers a company with an FFO to total debt ratio of more than 0.6 to have minimal risk.