Why is interest expense included in 'cash flow from operations' on the cash flow statement?

because loan taken is utilised for operating activities of business as all plant and machineries purchased from loan or from other capital are utilised for operating activities of business. Thanks for inviting me.

Dear friend agreed with your answer completely

When FASB95, Statement of Cash Flows, was created requiring interest expense to be classified in operating activities, it's interesting to note that three of the seven board members were in dissent. This is speculation, but perhaps the logic is that interest expense is a period expense already included in net income (part of operating activities), whereas the inflows and outflows of financing activities are balance sheet transactions.  Perhaps there is no way to logically connect the two (i.e. classify them both as financing activities). You should also note that "Interest Paid" appears as a supplemental disclosure (is neither operating, investing or financing).  I believe the logic is that one cannot derive this amount from the interest that is buried (included) in net income and accrued interest payable (typically included in Accounts Payable). So the disclosure, as it is required, tells the reader all the numbers they need to know:  in flows and outflows from financing activities and the related interest (appearing in the supplemental section).  This method would appear to provide more transparency, as opposed to lumping the two together in financing activities and not being able to tell how much of the outflow was principle payments versus interest. It's just an educated guess.  I don’t' work for the FASB or have access to the research, discussions and debates (which is the only place you'll likely find the real answer to your question, in my view).