Amortisation
Short definition
Amortisation spreads the cost of intangibles (licences, software, customer contracts; goodwill in some GAAPs) over time. It is not cash; it is added back with depreciation in EBITDA.
Detailed explanation
Under IFRS goodwill is not amortised; it is tested for impairment. Local GAAP may require amortisation. Customer and brand assets created in purchase accounting widen the EBITDA–EBIT gap after a deal.
Capitalised software development slides between amortisation and opex. Loan amortisation (principal repayment) is a different word; that cash sits in financing cash flow.
Why it matters for the CFO
Adjusted EBITDA often adds back acquisition amortisation; that is an accounting bridge, not a cash saving. In valuation, add amortisation after NOPAT and deduct licence renewals as capex-like cash.
How to read it
Amortisation / intangibles reveals the life assumption. A jump is usually PPA after a deal, not operating decay. A goodwill impairment is not amortisation; it is one-off and irreversible.
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Definitions are educational. They are not investment, credit or tax advice.