Interest Rate Expenses

Understanding Interest Rate Expenses

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Interest rate expenses -

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A. have been increasing more or less continuously. That increase was especially pronounced during the 1980s, when firms increased their debt financing and financial risk. Interest rate expenses as a percentage of sales have also been very volatile.

B. have increased up to 1989, and have since been decreasing. That decrease is the result of an interest rate decline and of corporations reducing their debt levels. Interest rate expenses as a percentage of sales have also been very volatile.

C. have been increasing more or less continuously. That increase was especially pronounced during the 1980s, when firms increased their debt financing and financial risk. Interest rate expenses as a percentage of sales have increased from 2.44% in 1977 to 7.47% in 1996.

D. have increased up to 1989, and have since been decreasing. That decrease is the result of an interest rate decline and of corporations reducing their debt levels. Interest rate expenses as a percentage of sales have increased from 1.44% in 1977 to 3.47% in 1996.

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A. B. C. D.

Interest rate expenses had increased up to 1989, rising from 1.44% of sales in 1977 to 3.47% in 1989. That increase was especially pronounced during the 1980s, when firms increased their debt financing and financial risk. That trend started reversing during the 1989-1990 recession because of an interest rate decline, and because of corporations reducing their debt levels. Interest rate expenses are generally fixed, and have therefore varied considerably as a percentage of sales, which are quite volatile.

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