EBITDA and FFO

CFA Level II
#1

The CFAI book says

FFO = EBITDA - interest expense

or

FFO = NI + dep/amortization + deferred tax charges + gains/losses from sales of property and debt restructuring

In the first formula taxes are not taken out.

But in the second formula taxes are taken out.

Instead of EBITDA, do they mean EBIDA?

WTF BBQ

#2

Both are right and will give you the same answer the point is

You are using FFO (and AFFO) in REIT valuation and REITs are not taxed on trust level so both will give you the same answer.remember the only party paying tax here is the holder of the REIT shares, but it is not a corporate tax.

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