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BUSINESS ADVISOR
• First, you get to spread out the economic damage.
• Second, the cost of the equipment is offset against the sales in a
given year, which lets you better gauge the profitability of your purchase. If the microscope will result in $65,000 worth of procedures
in a single year, your margin of profitability on it will actually be
90%.
• Third, you can claim depreciation as a tax
deduction against revenue in order to determine taxable income.
On the downside, like any extended payment plan, depreciation
actually costs you more over the long run, because inflation depreciates the value of currency. So if inflation is 3% per year for those 7
years, you're paying nearly $200 more in real dollars in year 2 than
you did in year 1, and another $200 more in year 3 than in year 2. This
is why investing in assets is a good move when inflation is low — as it
has been the last few years. Although cash flow may be tighter, the
capital equipment won't actually cost you as much in the long run.
OSM
Mr. Earnhart (searnhart@earnhart.com) is the president and CEO of
Earnhart & Associates in Houston, Texas.
D E C E M B E R 2012 | O U T PAT I E N T S U R G E R Y M A G A Z I N E O N L I N E
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