Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Current Portion of Long-Term Debt (CPLTD)

What it is:

The current portion of long-term debt (CPLTD) is the portion of a company's long-term debt payments that are due in less than one year.
 

How it works (Example):

For example, let’s assume that XYZ Company borrows $10,000,000 from Bank ABC. Because the loan is not due for five years, Company XYZ records the portion of the loan that is not due in the next 12 months as a long-term liability. The part that is due in the next 12 months, however (let’s say it’s $145,000), is the current portion of long-term debt and is recorded as a current liability.

Why it Matters:

Information about a company’s current portion of long-term debt is a key component of accurate financial reporting and a crucial part of thorough financial analysis. Most notably, they help analysts determine how much cash a company needs to have on hand over the next 12 months to avoid default on loan payments.

Although the Financial Accounting Standards Board, the Securities and Exchange Commission, and other regulatory bodies define how and when a company’s liabilities are reported, and although liabilities make up a significant portion of the balance sheet, not all liabilities are required to appear on the balance sheet, which is why analysts must also carefully study the notes to a company’s financial statements.

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