CompanyGraph
Measures actual cash spent servicing debt, exposing the real liquidity drain from borrowing which may differ from the accrual-based interest expense.
Interest paid is the cash the company spent on interest for its debt. Higher interest payments usually mean more leverage and less free cash available for other uses.
Interest paid is the cash the company spent on interest for its debt. Higher interest payments usually mean more leverage and less free cash available for other uses.
Interest paid may differ from interest expense on the income statement due to:
- Accrual timing: Interest may be expensed before or after cash payment
- Capitalised interest: Some interest is added to asset costs rather than expensed
- Payment schedules: Semi-annual or annual interest payments create timing gaps
Key considerations:
- Debt burden indicator: Rising interest payments signal increasing leverage
- Cash flow impact: Interest reduces cash available for growth and dividends
- Coverage analysis: Compare to operating cash flow to assess sustainability
- Rate sensitivity: Variable-rate debt means interest payments can fluctuate with market rates
The interest coverage ratio (operating income divided by interest expense) is a common measure of a company's ability to service its debt. Low coverage ratios may indicate financial stress.
How it relates
Free Cash FlowFree cash flow is the cash a company has left after paying its everyday costs and the investments needed to keep the business running. It is the money that can be used to pay down debt, pay dividends, buy back shares or invest in new projects.−Interest Paid=Levered Free Cash Flow (TTM)Levered free cash flow (TTM) is the cash left after paying operating costs, investments and interest on debt. It shows how much cash is really available to equity holders.
Where it fits
Long-term DebtLong-term debt is borrowing that is due more than one year in the future, such as bonds and bank loans. It can help finance growth but also increases financial risk.→Interest Paid