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Financial Modeling Depreciation

About Financial Modeling Depreciation

In financial modeling, depreciation can be calculated several different ways: (1) as a percentage of revenue, (2) as a percentage of property plant and equipment, (3) on a straight-line basis, and (4) on an accelerated basis. The most appropriate method to use in your model will depend on how much detail is required and what the ultimate use for the analysis is. An FP&A model, for example, requires lots of detail on depreciation, while an LBO model, by contrast, does not.

 

Financial Modeling Depreciation

Additional Questions and Answers

CFI is the official global provider of financial modeling and valuation analyst FMVA Designation. CFI’s mission is to help anyone become a world-class financial analyst and has a wide range of resources to help you along the way.

In order to become a great financial analyst, below are some additional questions and answers for you to explore further:

  • What is are the types of financial models?
  • What is sensitivity analysis?
  • What is bookkeeping?
  • What are the most common valuation methods?

Example Excel Model

Below is a screenshot from one of CFI’s online analyst training and certification courses, offered 100% online.

To learn How to Build an Excel Model step-by-step, click on the image below.

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