Interest expense =non operating expenditure, interest paid=CFO

CFA Level I FRA
#1

Hi

I have a question about interest expenditures

For non financial firms, interest expenditures are not considered as operating expenditures. However, interest paid are considered as operating cash flows.

So, how comes that an interest expenditure can be a nonoperating expense, but its cash outflows are operating cash flows?

Isn’t it a little contradiction?

#2

Yes it is.

It’s one of the stupidities of US GAAP. You simply have to remember it.

As far as I can tell, there’s no reason for it.

#3

OK,

In IFRS, it can be considered as an financial cash flow, so its kind of more logic than US GAAP

#4

You got it.

#5

So, there are at least two kind of expenditures: CAPEX and OPEX. If its neither a CAPEX and on OPEX, what is the nature of the interest expenditure?

Can we consider that Interest Expense is a class of expenses such as CAPEX and OPEX?