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Explain Income (FFO) Multiple?

Explain Income (FFO) Multiple?

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Answer #1

An (FFO) multiple is known as the multiple of the FFO per share of the particular industry. This is computed by dividing the price of the share by the fund from operation per share.

The multiple is a very significant concept in the (REIT) measurement. This tool is to assist the entrepreneurs, investors, analysts, and others which are related to investing in the REIT by valuing its share prices.

Each business and organization has some specific tools to compare their performance and analyze the cost and return. Likewise, in the field of REITs, this tool is the specific measurement tools.

FFO Multiple = Price of company shares / FFO per share;

Where,

FFO per share =

  1. Net Income +
  2. Amortization +
  3. Depreciation
  4. - Gains/Losses from the sale of assets
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