No.
Because it is a liability.
Liabilities, which are either internal (shareholders money) or external (borrowed funds), are used to fund the business Assets.
- External liabilities such as bank loan cost explicitly in terms of ‘interest charge’ that shows up on the PnL. Internal liabilities such as RESERVES (shareholders money retained by the business) does not cost explicitly in terms of ‘interest charge’.
Company like us gets interest only on their financial assets and pays interest on external financial liabilities.
| Subscribe To Our Free Newsletter |
