Section 179

Section 179 of the Internal Revenue Code allows businesses to take current year tax deductions for capital asset purchases. It can be good for reducing current year tax expense but it can also hinder the comparability of after tax income. Business owners who understand this have less risk of underestimating their "gut level" tax position for the year.

Capitalization Policies

Capitalization policies drive the decision within companies to either expense or capitalize new purchases. CEO's and owners that understand their companies cap policy understand more about their fixed asset base, the efficiencies or inefficiencies in their fixed asset accounting function and the extent to which large purchases are or are not being tracked on the balance sheet.

Depreciation

Most business owners and execs will ignore depreciation expense because it is not a CASH charge. However, if understood correctly depreciation and its counterpart, accumulated depreciation, give business owners and execs insight into the timing of necessary capital expenditures.

EBITDA

EBITDA is an often misunderstood term and those who know what the acronym means often don't know why certain items are added back to net income. This short tutorial explains EBITDA and why the various components are important when it comes to measuring operating performance.