What is a 'One-Time Charge'

A one-time charge is a charge against a company's earnings that the company's managers say they expect to be an isolated event that they expect is unlikely to occur again. A one-time charge can either be a cash charge against earnings such as the cost of paying severance expenses to laid-off former employees or a non-cash charge such as the writing down of the value of assets such as a piece of real estate whose market value has fallen due to changes in business fundamentals or consumer preferences. Financial analysts routinely exclude one-time charges when they evaluate a company's ongoing earnings potential.

BREAKING DOWN 'One-Time Charge'

Some one-time charges do indeed only take place once. However, many companies incorrectly record charges that they repeatedly incur in the course of their usual business activities as one-time charges. This practice may make the company’s financial health look better than it really is and it is a practice that investors should be aware of.

For example, Acme Technology Company may properly write off costs related to restructuring its file server business as a one-time charge. However if the company also writes down inventory costs every other quarter and reports these charges as one-time charges, it is less than clear that these inventory write-down charges are truly one-time charges and Acme’s financial circumstances may be somewhat different than investors and analysts are being led to believe by the company.

RELATED TERMS
  1. Finance Charge

    A finance charge is a fee charged for the use of credit or the ...
  2. Minimum Finance Charge

    A minimum finance charge is the least amount of interest a borrower ...
  3. Activity Charge

    An activity charge is a fee charged to cover the servicing costs ...
  4. Administrative Charge

    An administrative charge is charged by an insurer to cover expenses ...
  5. Fixed Charge

    A fixed charge is any type of fixed expense that recurs on a ...
  6. Unusual Item

    An unusual item is a nonrecurring or one-time gain or loss or ...
Related Articles
  1. Investing

    Ceiling Falls On Exploration And Production Sector

    Exploration and production companies' use of esoteric accounting charges caused a sharp decline in commodity prices.
  2. Investing

    Accounting Rules Could Roil The Markets

    FAS 142 is an accounting rule that changes the way companies treat goodwill. Be aware of the impact it has on reported earnings to avoid making bad investment decisions.
  3. Investing

    ETFs vs. Mutual Funds: The Lowdown on Costs

    Confused about the full range of fees on ETF and mutual funds? Here's a quick guide on fees and expenses.
  4. Investing

    The iPhone 8 May Come Without A Charging Port (AAPL, QCOM)

    First, no headphone jack. Next, possibly no recharging port.
  5. Personal Finance

    Big Bank Stocks Face Upheaval On Messy Earnings

    Higher interest rates and lower taxes should boost bank stocks in the long run, but there are hurdles.
  6. IPF - Banking

    The Ins And Outs Of Bank Fees

    These service charges could nickel and dime you right out of your nest egg.
  7. Personal Finance

    How are Discount Airlines so Cheap?

    Ever wonder what the fees are behind airfare prices? It's more complex than you think.
  8. Trading

    Fund Costs and Expenses

    How much a fund charges for its services is the most important indicator of how well it will perform.
  9. Investing

    Discounted Cash Flow Analysis

    Find out how analysts determine the fair value of a company with this step-by-step tutorial and learn how to evaluate an investment's attractiveness for yourself.
  10. Financial Advisor

    How to Know if Your 401(k) Plan Fees Are Too High

    Finding out how much you are paying for your 401(k) plan takes some research, but you should know exactly what you are getting for your money.
RELATED FAQS
  1. What kinds of fees are involved in futures trading?

    Learn what the various costs are that are charged by brokerage firms and trading exchanges to individual futures trading ... Read Answer >>
  2. What is the difference between recurring and non-recurring general and administrative ...

    Understand the expenses involved in a company's general and administrative operating costs and the difference between recurring ... Read Answer >>
  3. How are the interest charges calculated on my margin account?

    One way that investors borrow funds from brokerages is through margin accounts; it is these interest charges that allow them ... Read Answer >>
Hot Definitions
  1. Futures Contract

    An agreement to buy or sell the underlying commodity or asset at a specific price at a future date.
  2. Yield Curve

    A yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but ...
  3. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  4. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  5. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  6. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
Trading Center