What Is Interest Expense?
Interest Expense is the amount of money that a company has to pay to service it’s debt.
When a company borrows money, that money is used to add assets to the balance sheet (such as buying factories) and shows up as a liability on the Balance Sheet (usually under long term debt) and then the interest payments that the firm has to make on this debt is listed on the income statement under interest expense.
Interest Expense is highly sensitive to interest rates and the amount of cash a company keeps and appears on the Income Statement.
Related Terms
