{"ok":true,"canonical_url":"https://dealroom.so/glossary/depreciation","api_url":"https://dealroom.so/api/public/glossary/depreciation","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"depreciation","term":"Depreciation","group":"Reading the business","definition":"This is an accounting method that spreads the cost of a tangible asset over its useful life, reducing its book value over time. It's a non-cash expense that impacts reported profits but not the actual cash flow of the business.","what_it_means":"When analyzing a business's Profit and Loss Statement, depreciation is often added back to net income to calculate cash flow metrics like SDE or EBITDA. Understand how depreciation affects the seller's reported profit and your true cash flow after debt service.","url":"https://dealroom.so/glossary/depreciation","official_sources":[],"related":[{"slug":"sde","term":"SDE","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","term":"EBITDA","url":"https://dealroom.so/glossary/ebitda"},{"slug":"add-backs","term":"Add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"useful-life-of-assets","term":"Useful life of assets","url":"https://dealroom.so/glossary/useful-life-of-assets"}],"related_questions":[]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Depreciation","url":"https://dealroom.so/glossary/depreciation","source_type":"DealRoom Data"}}