Which financial term refers to the decrease in value of hard assets?

The term that refers to the decrease in value of hard assets is depreciation. This financial concept is crucial for businesses as it allows them to allocate the cost of tangible assets over their useful life, reflecting the wear and tear or obsolescence that occurs over time.

Depreciation is particularly important for accounting purposes, as it impacts the net income of a company and helps provide a more accurate representation of a company's financial health. By recognizing depreciation, businesses can match the cost of an asset to the revenue it generates during each accounting period. This not only aids in financial reporting but also affects tax calculations and investment decisions.

In contrast, amortization relates to the gradual writing off of intangible assets over their useful life. Revenue signifies the income generated from normal business operations, while EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a measure of a company's overall financial performance that excludes certain expenses to provide a clearer view of operational profitability. Understanding depreciation is essential for anyone involved in financial management or compensation analysis, as it plays a vital role in asset management and financial valuation.