D&A (Depreciation & Amortisation)
The systematic allocation of the cost of tangible (depreciation) and intangible (amortisation) long-term assets over their useful lives.
Also known as: Depreciation and Amortisation, D&A, Depreciation & Amortization
One-line definition
D&A is a non-cash charge that spreads the cost of assets over time — added back to operating profit to arrive at EBITDA.
Formula
EBIT = EBITDA − D&A
EBITDA = EBIT + D&A
TS nuance
While D&A is non-cash, it represents the economic consumption of assets that will eventually need replacing (capex). High EBITDA with minimal D&A relative to capex may signal under-depreciation — an accounting quality issue TS teams assess.
Related terms
EBITDA
Earnings Before Interest, Taxes, Depreciation and Amortisation — the most cited profitability proxy in M&A.
Capex vs Opex
The distinction between capital expenditure (long-term asset investment, capitalised on the balance sheet) and operating expenditure (period cost, expensed through the P&L).
Goodwill
The intangible asset recorded on a buyer's balance sheet when the acquisition price exceeds the fair value of the net identifiable assets of the acquired entity.
Intangible Assets
Non-physical long-term assets including brands, customer relationships, technology, patents, and licences, recognised on the balance sheet.
IFRS 16 Impact
The effect of the IFRS 16 lease accounting standard, which requires operating leases to be capitalised on the balance sheet as right-of-use assets and lease liabilities.