Depreciation/Amortization - Income Statement

Hi! I was just wondering if anyone could help me out with this: I’m currently looking at the 10-K for Coca-Cola and i realize they don’t report depreciation and amortization on their income statement, so i guess it’s part of COGS/SGA/Other? I can’t seem to find anything in the notes about where they have filed Dep/Amo (if it’s COGS, SGA or a combination). For modeling purposes, whats best practice? COGS - Dep/Amo, and then Dep/Amo on separate lines?

Thanks in advance.

cash flow statement…

I know i can find the value of depreciation and amortization in the cash flow statement but isn’t it supposed to be on the income statement as well?

I haven’t looked at thier IS and I probably won’t but are you referencing the actual 10k or are you using a 3rd party provider? Some times the data is truncated and they force things to fit

Actual 10-K. Same case for Walmart. They list depreciation and amortization in their cash flow but not income statement. For my valuation modeling purpose i can’t just subract depreciation/amortization from gross profit (as that would be double counting if it is included in COGS?).

There is a very high liklihood that D&A is embedded in both COGS and SG&A.

I see. Thank you. So i can’t model it like this if it is embedded?

Revenues - COGS = Gross Profit - SGA = EBITDA - D&A = EBIT

I mean, since i do not know the portions of D&A in COGS and SG&A.

That is only correct if you are reducing the expenses by the amounts of D&A.

So, I would go:

Revenues - COGS = Gross Profit

Gross Profit - (SGA - D&A) = EBITDA


Note: This assumes 100% D&A is in SGA, which as I said earlier, is probably not accurate. But if you are only concerned with EBITDA, it really doesn’t matter. If for some reason “Gross Profit” is an important value for your purposes, then this will not be the same for all companies since there is likely some degree of D&A in COGS.

Thank you! I appreciate the clarification.

My advice would be to avoid any calculation in the model which assumes that D&A is 100% assigned to either COGS and SG&A. As has been correctly pointed out by other commenters, it is likely that it is split up between the two line items. Because you don’t know how it is allocated at this point, you should avoid making implicit assumptions and simply set up your model so it arrives at EBIT and then add an “add back: D&A” line to get to EBITDA.

You may of course set up a different area of the sheet, where you will make a clear assumption on the allocation of D&A amongst COGS and SG&A, if this is pertinent to your analysis. But I would generally avoid making a shortcut and assuming that D&A is fully allocated to COGS (or SG&A), because (a) this is almost sure to be wrong and (b) it will easily confuse someone who will look at the model and be unable to reconcile to reported values.