Скачать или смотреть What is Depreciation?

Why is Depreciation Important for Investors?

• Shows the current value of company assets
• Impacts net income and profitability
• Reduces taxable income
• Helps evaluate the financial health of a company
• Non-cash expense that affects cash flow

👉Impact on Earnings Report:

• Net Profit: Lower due to depreciation expense.
• Earnings Per Share (EPS): Reduced as depreciation affects net income.
• Asset Value: Depreciation lowers the book value of assets on the balance sheet.

👉 Red Flags for Investors

• Frequent changes in depreciation methods can indicate financial manipulation.
• Unrealistically low depreciation rates may overstate asset values.
• Unexpected hikes in depreciation expenses can signal asset obsolescence or poor management.