Question

What is the difference between earnings per share (EPS), funds from operation (FFO), and dividends per share?

Answer 1

Earnings per share is in relation to net income and common shares outstanding. Earnings per share is the income earned by the company on one share. Earnings per share would be based on accrual accounting. It is calculated as net income divided by the number of shares outstanding.

Funds from operation is the cash flow generated from the business operation of the company. The fund from operation is calculated based on cash accounting. It is calculated by adding back non cash expense to the net income.

Dividend per share is the amount of dividend paid on one share. It calculated by dividing total dividend paid by the number of shares outstanding. Dividend is distribution of net income and paid from the retained earnings.

Thus, all the three are different.