{"id":5300,"date":"2021-10-25T00:06:02","date_gmt":"2021-10-24T23:06:02","guid":{"rendered":"https:\/\/www.simtrade.fr\/blog_simtrade\/?p=5300"},"modified":"2021-10-25T00:06:02","modified_gmt":"2021-10-24T23:06:02","slug":"long-term-liabilities","status":"publish","type":"post","link":"https:\/\/www.simtrade.fr\/blog_simtrade\/long-term-liabilities\/","title":{"rendered":"Long-Term Liabilities"},"content":{"rendered":"

Long-Term Liabilities<\/h1>\n

\"Shruti<\/a><\/p>\n

In this article,\u00a0Shruti CHAND<\/a>\u00a0(ESSEC Business School, Grande Ecole<\/i> Program – Master in Management, 2020-2022) elaborates on long-term liabilities.<\/p>\n

This read will help you get started with understanding\u00a0long-term liabilities and how it is\u00a0used in\u00a0making investment decisions.<\/p>\n

Introduction<\/h2>\n

Long-term liabilities are financial liabilities of the firm that are due in a period more than one year. These long-term obligations are also referred to as non-current liabilities.<\/p>\n

You can find the long-term liabilities in the balance sheet including various items such as all long-term loans, bonds, and deferred tax liabilities.<\/p>\n

While the current liabilities of a business represent the funds used by a company to cover its liquid assets, the non-current part of the liabilities are used to cover primary business operations and purchase of heavy long-term assets.<\/p>\n

The current and non-current liabilities are separated from each other to help readers understand the financial prosperity of the businesses in different time scenarios.<\/p>\n

The most common examples of long-term liabilities are as follows:<\/p>\n

\u25cf Bonds payable
\n\u25cf Long term loans
\n\u25cf Pension liabilities
\n\u25cf Deferred income taxes
\n\u25cf Deferred revenues<\/p>\n

Final Words<\/h2>\n

Understanding the level of long-term liabilities of the business helps the reader to assess the risk behind meeting the financial obligations of a business. To be able to measure this risk level, it is very important for the investor to understand the concept of leverage. It helps the reader understand how much capital comes from debt. This
\nhelps one understand the position of a company towards its ability to meet its financial obligations. High levels of leverage can be risky for the business. You can measure this using various financial ratios. Common leverage ratios include debt-equity\u00a0ratio and equity multiplier.<\/p>\n

Relevance to the SimTrade certificate<\/h2>\n

Understanding long term liabilities and its significance in the books of accounts of a company will help you better understand the financial health of companies you would like to invest in.<\/p>\n

About theory<\/h3>\n