Financial health
Depreciation and amortization
D&A
What it is
The accounting spread of an asset's cost over its useful life. A machine costing $10M and lasting 10 years weighs $1M a year in the accounts, even though the cash left in one go at the start.
How to read it
It's a NON-CASH charge: it gets added back to earnings to recover the cash generated. That's exactly what the EBITDA calculation does.
What it does not tell you
The depreciation period is a company CHOICE. Lengthening it mechanically flatters earnings, with nothing having changed in reality.
Other measures — Financial health
Educational content. Polaris is not a registered investment adviser and makes no recommendation.