Classification o interest expence on debt

CFA Level I
#1

Hi all, can anyone please tell me the classification of item ‘interest expense on debt’ from B/S. should it be included in the calculation of cash flow? if so, its CFO or CFF? Thanks

#2

interest expense is an CFO outflow is that is what you mean

#3

It is a CFO outflow, ONLY for the DIRECT Method. In the indirect method, since your starting point is Net Income, Interest expense would not show up.

#4

sure if you start from net income then it has its effect already included

#5

oo… its excluded from IDM, thats where confused me, THHANKS!!!