cash charge

Definition

A company charge-off that has to be made against the company's earnings and requires an initial expenditure of cash. This occurs usually when a company works to downsize or increase the overall efficiency of operations. The company will be required to take one-time charges which are not expected to occur on a consistent basis so they will place charges on their balance sheets and take a charge against their earnings. An example of a cash charge would be using early retirement packages to downsize employees into an early retirement and then replace workers with staff at cheaper salaries.

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