Drama of Depreciation

Companies include several non-cash items like depreciation in their profit and loss accounts. Depreciation is the method of distributing the heavy capital expenditure incurred to build an intangible asset over its useful period. Some companies charge depreciation more aggressively because of the nature of their businesses and assets. We have given here a list of companies that charge huge depreciation. This may result in a fall in profit before tax and net profit if one goes by the accrual method of accounting, while the cash method of accounting shows a higher profit. The result of higher depreciation write-off is reflected in the EPS, which is based on the net profit, and the operating cash flow per share, which is based on the cash generated.