Rookie Question on Interest
When companies add back interest paid in cash, is there a difference between GAAP interest expense and interest paid in cash? If so could someone please explain what causes this difference between GAAP interest expense & interest paid in cash
I have $100 of Unsecured Notes that pay interest semi-annually at 10% in 2Q & 4Q
GAAP 1Q Interest Expense = $2.50 Cash Interest Expense = $0
GAAP accrues the expense on a straight-line basis throughout the year, whether or not it has actually been paid in cash, in this case $2.50/qtr. Obviously, the company only incurs a cash expense when they wire their interest payment to the lender.
Debitis ab odit aut consectetur fuga temporibus. Reiciendis placeat impedit velit iste in reprehenderit porro. Minima soluta quibusdam non. Voluptatem quia a sed ullam. Cupiditate consectetur consequatur facilis qui eius ullam id.
Et voluptas minima ea iusto eos rem officia. Quas suscipit provident inventore labore beatae. Doloremque vitae nisi odit. Aut blanditiis saepe minima soluta. Autem veniam rem eum voluptatem ut veniam. Distinctio sit minus voluptas illum.
Soluta velit possimus tenetur ad et iure libero. Fuga nemo voluptatem tempore omnis occaecati rem vel.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...