# Depreciation Rate Formula

Finance Formulas / July 16, 2018 / Alia Marquez

Consider the following example to illustrate the concept. Assume hypothetical company BigBox has operating income or earnings before interest and taxes (EBIT) of \$100 million in Year 1, with interest expense of \$10 million, and has 100 million shares outstanding. (For the sake of clarity, let’s ignore the effect of taxes for the moment.)

### Present Value Formula

##### Midpoint Formula Microeconomics
###### Rate Of Return On Investment Formula

Liabilities include all of the money a company owes. Similarly to assets, liabilities are divided into current liabilities, which include things like rent, tax, utilities, debts that are payable within a year, and dividends payable. "Long-term liabilities" generally refers to long-term debt the company has issued (bonds), but can include other non-immediate expenses such as pension obligations.

EBITDA is a non-GAAP financial figure that measures a company's profitability before deductions that are considered somewhat superfluous to the business decision-making process. These deductions are interest, taxes, depreciation and amortization, all of which are not part of a company's operating costs and are therefore not associated with the maintenance and administration of a business on a day-to-day basis.

What does the debt service coverage ratio mean? A DSCR greater than 1.0 means there is sufficient cash flow to cover debt service. A DSCR below 1.0 indicates there is not enough cash flow to cover debt service. However, just because a DSCR of 1.0 is sufficient to cover debt service does not mean it’s all that’s required.

### Rate This Depreciation Rate Formula

78 out of 100 based on 317 user ratings
1 Star 2 Stars 3 Stars 4 Stars 5 Stars