The Comprehensive Guide on How to Read a Financial Report: Wringing Vital Signs Out of the Numbers, + Website

CHAPTER 15

LONG-TERM LIABILITIES, INTEREST, AND OTHER EXPENSES

Debt, Debt, and More Debt—Multiple Financial Report Connections

Unless you’ve had your head in the sand during the past five years, everyone realizes that the world is awash in debt. Public debt (now more than $17 trillion just for the United States federal government) is growing at alarming rates, which has more than a few world leaders concerned.

But our job in this chapter isn’t to address the moral, economic, and political implications of how a country such as the United States will be able to manage its debt levels, rather our goal is to focus on the multiple financial statement connections between the different types of debt and interest expense. But we couldn’t really leave this subject without providing one more reference, this time to not just the stated United States public debt level of $17 trillion but to the real debt level, when all guarantees, commitments, and contingencies are actually accounted for.

This chapter helps the reader understand total long-term debt, both debt that has been secured in a formal manner (such as business lines of credit and notes payable supported by legal agreements/documentation) and debt that is considered more of a contingency or commitment.

EXHIBIT 15.1—INTEREST EXPENSE, NOTES PAYABLE, AND CURRENT PORTION OF DEBT

Dollar Amounts in Thousands

Understanding Debt Basics and ...