Book value of debt definition
/What is the Book Value of Debt?
The book value of debt is comprised of the following line items on an entity’s balance sheet :
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Notes payable . Found in the current liabilities section of the balance sheet.
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Current portion of long-term debt . Found in the current liabilities section of the balance sheet.
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Long-term debt . Found in the long-term liabilities section of the balance sheet.
What is Not Included in the Book Value of Debt
The book value of debt does not include accounts payable or accrued liabilities , since these obligations are not considered to be interest-bearing liabilities.
How the Book Value of Debt is Used
The book value of debt is commonly used in liquidity ratios , where it is compared to either assets or cash flows to see if an organization is capable of supporting its debt load.