CFA Practice Question

There are 195 practice questions for this study session.

CFA Practice Question

An analyst gathers the following information for a REIT:

EBIDTA: $100
Interest: 20
Depreciation: 30
Dividends Paid: $55.

What is its FFO?

A. $45.
B. $50.
C. $80.
Correct Answer: C

GAAP Net Income: $100 - 20 - 30 = $50. Dividends per share is what the REIT actual distributes to shareholders.

How can the REIT pay more in dividends than it receives in income? GAAP NI represents accounting earnings, not cash flow. Funds from Operation (FFO) = GAAP NI + Depreciation = $80.

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