easy · Principles of Finance financial-statements-markets-wc

Why does 'Amortization' appear as an add-back in the operating section of the Cash Flow Statement?

1. It represents cash proceeds received from selling an intangible asset such as a patent.
2. It is the scheduled repayment of a bank loan's outstanding principal balance recorded over time.
3. It increases the reported book value of the firm's goodwill balance carried on the consolidated balance sheet.
4. It is a non-cash expense for intangible assets, similar to how depreciation works for physical assets.

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