Long-term liabilities

Long-term liabilities refers to debt that is to be repaid more than 12 months out from its last balance sheet date. Long-term debt can include bank debt, mortgages or bonds.

Long-term debt is not necessarily a bad thing if the company’s management can invest in projects with a high return on capital. Debt can serve to increase the company’s earnings over time. Also, while examining long-term debt, one should also study the interest coverage ratio to make sure that the company is able to service its interest expenses comfortably.

Read : Deferred Taxes