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#cfa-level-1 #reading-25-understanding-income-statement
For financial companies, interest expense would be included in operating expenses and subtracted in arriving at operating profit because it relates to the operating activities for such companies.
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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
dministrative, and research and development expenses from gross profit. Operating profit reflects a company’s profits on its usual business activities before deducting taxes, and for non-financial companies, before deducting interest expense. <span>For financial companies, interest expense would be included in operating expenses and subtracted in arriving at operating profit because it relates to the operating activities for such companies. For some companies composed of a number of separate business segments, operating profit can be useful in evaluating the performance of the individual business segments, because interest


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