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easy · CFA Level I Financial Statement Analysis

A firm reporting under IFRS has a policy of classifying interest paid as a financing activity.

To compare this firm to a US GAAP peer, an analyst should:

  1. Subtract interest paid from the IFRS firm's CFO.
  2. Make no adjustment, as interest paid is always non-operating.
  3. Add interest paid to the IFRS firm's CFO.

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