Reading the accounts
Writedown
Also called Impairment
Reducing the recorded value of an asset when it is no longer worth what the books say.
How it works
Impairments are non-cash and backward-looking: they acknowledge that money already spent did not produce the expected value.
Goodwill impairments after acquisitions are the most common large example, and are effectively a public admission that a deal disappointed.
Related terms
- GoodwillThe premium paid over the fair value of a business’s identifiable assets when acquiring it.
- Net incomeWhat is left after every cost, including interest and tax — the profit belonging to shareholders.
- Adjusted earningsCompany-defined profit that excludes items management considers unrepresentative.
- InventoryGoods a company is holding to sell, valued on the balance sheet at cost or market value, whichever is lower.
More in Reading the accounts
- Accounts receivable
- Working capital
- Accrual accounting
- Tangible book value
- Share-based compensation
- Assets
- Runway
- Audit opinion
All 51 Reading the accounts terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.