Glossary

Long-Term Debt

Long-term debt refers to liabilities that last longer than one year. They are also referred to as funded debt. Firms must disclose their long-term obligations on their balance sheet, including the corresponding interest rates and the date of maturity. Long-term debt differs from long term liabilities as the latter covers the supply of various services that may be paid already. Firms with extensive amounts of debt may be overwhelmed by interest rates. Moreover, they will have insufficient amount of working capital for their daily operations. These factors may ultimately result in bankruptcy. Long-term debt typically consists of business loans, mortgages and bonds with maturities over one year.