Profit / ROI Manipulation: Depreciation


Reading financial statements is sometime, unreliable due to the fact that everybody could choose what they want to speak and things that people would like to listen, such as Cash Flow, Return of Investment, Dividends, profit, profit margin and never "Depreciation", as it seems been covered.

Depreciation normally points to the decrease in value of an asset. Whenever we talk about cash flow, "depreciation" is out of the picture and so with the maintenance of such assets that comes with it, not forgetting inflation hits up to destroy some of the profit margin.

Therefore knowing what is a business would consists of, such as the more fixed assets you are having, the more upkeep, the more new machine to consider in the next 5 years, and the more spending to plan.

The more spending = profit is taken out.

This stressful situations mostly could be found in any industry particularly in the Franchising Industry.







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