Module VI· Three-Statement Model MechanicsIntermediate
Question
How do you treat non-recurring items such as restructuring, M&A costs, and impairments?
Answer
Separate non-recurring items from run-rate operating performance. Include them in reported financials if required, but show adjusted EBITDA / EBIT excluding them when appropriate. Cash non-recurring items still matter for cash flow. Impairments are usually non-cash and added back in cash flow, but they may indicate real value deterioration.