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Does interest expense (cash or PIK) both show up on the income statement and added back in the CFO and if so Why?

Please explain the concept.

Thanks

Comments (2)

  • CountryUnderdog's picture

    PIK interest will show up on IC because it is accrued during the year. It is then added back on the CF because PIK interest is not paid, but rather the interest is added to the original principal, thus increasing the level of debt on the BS, and the entire loan will be paid off at maturity.

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