Restructuring Charge

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Definition of 'Restructuring Charge'

A restructuring charge is an expense that a company incurs in connection with a restructuring. A restructuring can involve a variety of activities, such as closing or consolidating facilities, laying off employees, or changing the way a company operates. Restructuring charges can be significant, and they can have a negative impact on a company's earnings.

There are a number of reasons why a company might undertake a restructuring. For example, a company might restructure in order to improve its efficiency or to reduce its costs. A company might also restructure in order to comply with new regulations or to respond to changes in the market.

Restructuring charges can be classified as either one-time charges or ongoing charges. One-time charges are expenses that are incurred in connection with a specific restructuring event, such as the closing of a facility or the layoff of employees. Ongoing charges are expenses that are incurred on an ongoing basis as a result of the restructuring, such as the cost of severance payments or the cost of retraining employees.

Restructuring charges can be recorded in a company's income statement or in its balance sheet. If the charges are recorded in the income statement, they will reduce the company's net income. If the charges are recorded in the balance sheet, they will reduce the company's assets.

Restructuring charges can have a number of implications for a company. They can reduce a company's earnings, which can make it more difficult for the company to attract investors. They can also increase a company's debt, which can make it more difficult for the company to borrow money. In addition, restructuring charges can damage a company's reputation, which can make it more difficult for the company to compete in the marketplace.

Before a company undertakes a restructuring, it should carefully consider the potential costs and benefits of the restructuring. The company should also consider the impact of the restructuring on its employees, its customers, and its investors.

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