Interest Charge vs Interest Paid
Quick question for all your corp fin experts:
I was looking at a financial model: a company took out debt for project financing, and pays certain interest. In the model (not mine, hence the question, looked at it for 10 minutes only) there was a positive "interest charge" line item in the financing cash flows relating to this debt. Is this correct? Should it be positive or negative?
There was also an "interest paid" line item in the operating cash flows, which was negative.
The latter is the more common line item i understand, but i am unclear with the former, and what is the difference in corp fin lingo between interest paid and interest charge?
thanks
btw i know i'm not giving you a lot of info here, but i played around with the model just 10 minutes.. then had this come back in my head when i left..
It is most likely that it was capitalizing it's interest during construction.
so when you capitalize interest do you usually need to add it back to the CFS?
and it defined as a charge?
thanks
Of course it does, if it's a non-cash charge then it would have no impact to your ending cash balance. Only the interest paid (deducted out of CFO) should be subtracted.
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