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.
