{"id":28638,"date":"2023-12-18T16:41:30","date_gmt":"2023-12-18T16:41:30","guid":{"rendered":"https:\/\/swoopfunding.com\/ca\/?post_type=business-glossary&p=28638"},"modified":"2025-04-24T13:49:36","modified_gmt":"2025-04-24T13:49:36","slug":"long-term-liabilities","status":"publish","type":"business-glossary","link":"https:\/\/swoopfunding.com\/ca\/business-glossary\/long-term-liabilities\/","title":{"rendered":"Long-term liabilities"},"content":{"rendered":"

Definition<\/h3>\n

Long-term liabilities, also known as non-current liabilities<\/a>, are financial obligations<\/a> and debts that a company is expected to settle over an extended period, typically longer than one year. <\/span><\/p>\n

What are long-term liabilities?<\/h3>\n

These liabilities represent the portion of a company’s total liabilities that is not due for payment in the short term. Long-term liabilities play a key role in a company’s capital structure and financial stability.<\/span><\/p>\n

Types of long-term liabilities:<\/span><\/p>\n

    \n
  1. Long-term debt<\/b>: Such as bonds<\/a> and loans with maturities extending beyond one year.<\/span><\/li>\n
  2. Deferred tax liabilities<\/b>: Future tax obligations that will be paid over an extended period.<\/span><\/li>\n
  3. Lease obligations<\/b>: Long-term commitments arising from lease agreements.<\/span><\/li>\n
  4. Pension liabilities<\/b>: Commitments related to employee pension plans.<\/span><\/li>\n
  5. Long-term provisions<\/b>: Reserves set aside for expected future expenses.<\/span><\/li>\n<\/ol>\n

    Long-term liabilities, along with equity and short-term liabilities, contribute to a company’s capital structure. The composition of a company’s capital structure influences its financial risk, cost of capital<\/a>, and overall financial health.<\/span><\/p>\n

    Long-term liabilities are disclosed in a company’s financial statements<\/a>, specifically in the balance sheet<\/a> under the liabilities section. They are categorised separately from short-term liabilities to provide a clear picture of a company’s financial obligations over different time horizons.<\/span><\/p>\n

    Investors and analysts closely examine a company’s long-term liabilities when conducting financial analysis. The composition, terms, and conditions of long-term liabilities provide insights into a company’s financial strategy, risk tolerance, and future financial obligations.<\/span><\/p>\n

    Example of a long-term liability<\/h3>\n

    ABC Company decides to expand its operations and constructs a new manufacturing facility. To finance the construction<\/a>, ABC Company issues bonds with a maturity period of 10 years. The bonds have a face value of $1 million and carry an annual interest rate of 5%.<\/p>\n

    As a result of issuing these bonds, ABC Company incurs a long-term liability. The face value of the bonds, $1 million, represents the principal amount that ABC Company must repay to bondholders at the maturity date, which is 10 years from the issuance date.<\/p>\n

    Additionally, ABC Company is obligated to make periodic interest payments to bondholders throughout the term of the bonds. These interest payments, based on the 5% annual interest rate, represent the cost of borrowing for ABC Company and are considered part of the long-term liability.<\/p>\n","protected":false},"author":1,"template":"","class_list":["post-28638","business-glossary","type-business-glossary","status-publish","hentry"],"acf":[],"featured_image_urls_v2":{"full":"","thumbnail":"","medium":"","medium_large":"","large":"","1536x1536":"","2048x2048":"","image_blog":"","image_blog_full":"","image_podcast":"","image_banking":"","image_blog_internal":"","image_blog_medium":"","image_single_banking":""},"post_excerpt_stackable_v2":"

    Definition Long-term liabilities, also known as non-current liabilities, are financial obligations and debts that a company is expected to settle over an extended period, typically longer than one year. What are long-term liabilities? These liabilities represent the portion of a company’s total liabilities that is not due for payment in the short term. Long-term liabilities play a key role in a company’s capital structure and financial stability. Types of long-term liabilities: Long-term debt: Such as bonds and loans with maturities extending beyond one year. Deferred tax liabilities: Future tax obligations that will be paid over an extended period. Lease obligations:…<\/p>\n","category_list_v2":"","author_info_v2":{"name":"root","url":"https:\/\/swoopfunding.com\/ca\/author\/root\/"},"comments_num_v2":"0 comments","_links":{"self":[{"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/business-glossary\/28638","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/business-glossary"}],"about":[{"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/types\/business-glossary"}],"author":[{"embeddable":true,"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/users\/1"}],"version-history":[{"count":1,"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/business-glossary\/28638\/revisions"}],"predecessor-version":[{"id":34607,"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/business-glossary\/28638\/revisions\/34607"}],"wp:attachment":[{"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/media?parent=28638"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}