Why Interest expense is not a part of Operational Expense?



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Hi Binny,

Why Interest expense is not a part of Operational Expense?

Regards,
Ayan

1 Answer(s)


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Ayan, Operating expenses are the ones that are directly relevant to the business/product operations of a company like salary, r&d, rent etc. Interest expense is just money paid for borrowing money and is not directly relevant to the product or business of a company. Hence it is a non-operating expense. This is the same reason why Tax is also a non-operating expense