Back to glossary

Balance sheet

Long-term debt

Debt that is due more than one year from now. It is the biggest debt category for most businesses.

Long-term debt is borrowing due more than twelve months out: bonds, term loans, mortgages. As pieces approach maturity, they migrate into short-term debt.

Always compare it to profits. Long-term debt small enough that net income could clear it within three to four years leaves room for bad years; anything heavier is a risky leveraged assumption that earnings will stay steady.

Related terms