How is revenue different from market cap and What is depreciation & amortization?
1 Answer(s)
Binny
Good question Pradyut, 1) Typically when you say Google is a $250 billion company you are referring to its market cap and not revenue.
2) Depreciation and Amortization are accounting methods to match expenses to the time period in which they are used. So for example if your company buys a machine for Rs.1 crore, then you wont expense the entire amount this year since you might use the machine for 5 years - hence you will expenses Rs. 25 lakhs each year.
Depreciation is used for tangible items such as machinery, infrastructure etc,. Amortization is used for intangibles like intellectual property etc.
Oct 10 2012 11:50 AM
2) Depreciation and Amortization are accounting methods to match expenses to the time period in which they are used. So for example if your company buys a machine for Rs.1 crore, then you wont expense the entire amount this year since you might use the machine for 5 years - hence you will expenses Rs. 25 lakhs each year.
Depreciation is used for tangible items such as machinery, infrastructure etc,. Amortization is used for intangibles like intellectual property etc.