They're basically the same thing, but write-down are sometimes more discretionary (up to management), while impairments are determined based on rules and events outside the control of the management team.
Hello ! Thank you very much for your video ! If I wanted to adjust EBITDA and EBIT for non recurring charges but directly in the IS, how would you do that ? Would you remove the non recurring charges and add them back in the end, after Net Income?
It's best to create separate schedules that show the link between the Income Statement and those metrics. If not, just delete the expenses on the Income Statement and say that you've removed non-recurring charges.
Because the initial upfront spending on long-term investments (and on financing activities) is not recorded on the income statement since it is not tax-deductible (initial CapEx is not deductible, only Depreciation afterward is, and purchasing financial assets never is; raising debt/equity also doesn't affect taxes either way initially). And if something affects the company's cash balance but not its taxes, it will appear on the Cash Flow Statement.
![Working Capital and the Change in Working Capital in Valuation and Financial Modeling [REVISED]](http://i.ytimg.com/vi/tMgty8jwmHI/mqdefault.jpg)
![Working Capital and the Change in Working Capital in Valuation and Financial Modeling [REVISED]](/img/tr.png)
Life saver!!...superb
Thanks for watching!
Very clear
Thanks for watching!
Thanks - always wanted to know more about these in terms of valuation!
Александр Вальцев Thanks for watching!
Great video ;) thx
+kanibal90 Thanks for watching!
Thanks, a very clear explanation!
What is the difference between asset impairment and asset write-down?
They're basically the same thing, but write-down are sometimes more discretionary (up to management), while impairments are determined based on rules and events outside the control of the management team.
Hello ! Thank you very much for your video !
If I wanted to adjust EBITDA and EBIT for non recurring charges but directly in the IS, how would you do that ? Would you remove the non recurring charges and add them back in the end, after Net Income?
It's best to create separate schedules that show the link between the Income Statement and those metrics. If not, just delete the expenses on the Income Statement and say that you've removed non-recurring charges.
Can you do some ACCA financial statements analysis. I think I only get to understand things when I listen to your videos
Thanks for the suggestion, we hope to cover that topic in the future.
Why is it unlikely that the cash flow from investing and financing activities have already occurred in the income statement ?
Because the initial upfront spending on long-term investments (and on financing activities) is not recorded on the income statement since it is not tax-deductible (initial CapEx is not deductible, only Depreciation afterward is, and purchasing financial assets never is; raising debt/equity also doesn't affect taxes either way initially). And if something affects the company's cash balance but not its taxes, it will appear on the Cash Flow Statement.