How can the interest costs affect the ebit? This is so counterintuitive Ebit is before interest so how can interest costs affect it?
agreed. I think it should have been included in errata but it’s not.
Are you it’s a mistake?
I was confused as well but this was my guess. The MD&A exclosure reads… “Interest capitalization ends when the facility is ready for its intended use.” When you capatalize interest costs, it is INCLUDED in the cost of the asset, and depreciated once the asset is in use. But based on the statement above, you would assume this new manufacturing plant is STILL being constructed… If the asset is NOT YET in use, then these capitalized interest costs have yet to be depreciated, thus it has not showed up on their income statement yet (as part of COGS). And since EBIT is after depreciation, it was overstated by the amount not yet depreciated.
?!?!?! Lovely!