Non-Cash Charge

Dictionary Says

Definition of 'Non-Cash Charge'


A charge made by a company against earnings, which does not require an outlay of cash. Non-cash charges will lower earnings in the period when the charge was taken, and if it is large enough, can even turn a net profit into a loss. Many companies are inclined to treat non-cash charges as one-time events - even if they appear somewhat frequently - and report adjusted earnings that exclude the impact of such charges.


A non-cash charge may also be referred to as a write-down.



Investopedia Says

Investopedia explains 'Non-Cash Charge'


Non-cash charges are typically against the depreciation, amortization and depletion accounts on a company's balance sheet. Companies take these charges against earnings due to extraordinary circumstances such as accounting policy changes or significant depreciation in the market value of an asset or inventory.


For example, assume company A acquires company B for $500 million, of which $200 million is attributed to goodwill on its balance sheet. If company A subsequently discovers that B is not as valuable as it estimated at the time of acquisition, it may take a non-cash charge of say $100 million against goodwill. This charge will affect A's earnings in the period when it books the non-cash charge.



comments powered by Disqus
Hot Definitions
  1. Chicago Mercantile Exchange - CME

    The world's second-largest exchange for futures and options on futures and the largest in the U.S. Trading involves mostly futures on interest rates, currency, equities, stock indices and agricultural products.
  2. Private Equity

    Equity capital that is not quoted on a public exchange. Private equity consists of investors and funds that make investments directly into private companies or conduct buyouts of public companies that result in a delisting of public equity.
  3. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  4. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  5. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  6. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
Trading Center