Long-Term Debt
Borrowed funds that are due beyond one year, recorded as a non-current liability on the balance sheet.
What is Long-Term Debt?
Long-term debt is any borrowing with a maturity date more than one year from the balance sheet date, classified as a non-current liability. Common forms include corporate bonds, term loans, mortgages, and unsecured notes. The current portion of long-term debt — the amount due within the next 12 months — is reclassified to current liabilities each period. Long-term debt is a key component of a company's capital structure and is used to finance large capital expenditures, acquisitions, and working capital needs. Analysts examine long-term debt relative to equity (debt-to-equity ratio), EBITDA (leverage ratio), and operating income (interest coverage ratio) to assess financial risk.
Example
Apple Inc. reported approximately $85 billion in long-term debt on its September 2024 balance sheet, primarily consisting of fixed-rate senior notes issued at various maturities ranging from 2025 to 2060. The company uses low-cost debt to return capital to shareholders through buybacks and dividends rather than repatriating overseas cash. Despite the large absolute debt level, Apple's interest coverage ratio of over 30x reflects minimal financial risk given its $100+ billion in annual operating cash flow.