To find long-term debt in financial statements, open the company’s most recent Form 10-K or 10-Q on the SEC’s EDGAR database and look under non-current liabilities on the balance sheet. That line gives you the headline number. The rates, maturities, collateral, and covenants that determine whether the debt is manageable sit in the debt footnote and the Management’s Discussion and Analysis section further into the filing.
What Counts as Long-Term Debt
Long-term debt is any financial obligation not due within one year, or within one operating cycle if the cycle runs longer than twelve months. That cycle exception matters in industries like tobacco and lumber, where production timelines stretch well past a year.
The common forms are bonds, long-term notes payable, term loans, and mortgages on real estate. Finance lease liabilities belong here too. Under ASC 842, both finance leases and operating leases produce right-of-use assets and matching liabilities, so lease-related liabilities often sit alongside traditional debt on the balance sheet.
One distinction catches new readers constantly: the current portion of long-term debt, or CPLTD. This is the slice of an existing long-term loan due within the next twelve months, and it gets reclassified out of non-current liabilities and into current liabilities. If you want the company’s full debt burden, you have to add CPLTD back to the long-term debt line. Skipping it understates leverage, sometimes badly.
Where to Pull the Filings
Every U.S. public company files with the SEC. The annual report (Form 10-K) contains audited financial statements, footnotes, and management commentary. The quarterly report (Form 10-Q) provides interim, condensed financials. Both are free through EDGAR.
Go to sec.gov/edgar/search and type the company name or ticker in the search field. Filter by filing type to “10-K” or “10-Q,” and narrow the date range if you only want the most recent. Click the form type link in the results list to open the document.
EDGAR’s full-text search also lets you look inside filings for terms like “long-term debt,” “credit facility,” or “covenant.” That’s the fastest way through a two-hundred-page filing.
Reading the Balance Sheet
The balance sheet gives you the starting numbers. Liabilities split into current and non-current. Long-term debt appears under non-current liabilities, sometimes labeled “Long-Term Debt,” “Notes Payable, Non-Current,” or “Long-Term Borrowings, Net of Current Portion.” SEC rules require companies to separately state each type of long-term obligation, whether bonds, mortgages, or capitalized leases, either on the face of the balance sheet or in the footnotes.
Then check current liabilities for CPLTD. It’s often shown as its own line or grouped with short-term borrowings. Total outstanding debt equals the long-term debt figure plus CPLTD. That combined number is your baseline.
While you’re there, note cash and cash equivalents. Total debt minus cash gives you net debt, which many analysts prefer over the gross figure because it reflects the company’s ability to pay down a portion of what it owes immediately. A company with $500 million in debt and $200 million in cash has $300 million in net debt, a materially different risk picture than the gross number.
Digging Into the Debt Footnote
The balance sheet tells you how much. The footnotes tell you everything else. Look for a note titled “Debt,” “Long-Term Obligations,” or “Borrowings.” This is where the actual analysis begins.
Instruments, Rates, and Maturities
The debt footnote breaks out each individual instrument: senior notes, subordinated debentures, term loans, revolving credit facilities. For each one you’ll find the face value, issuance date, and interest rate. Fixed-rate instruments show a set percentage. Variable-rate debt is typically quoted as SOFR plus a specified margin, since SOFR replaced LIBOR as the dominant U.S. dollar benchmark after LIBOR’s final settings ceased in June 2023.1Federal Reserve Bank of New York. Transition from LIBOR
Pay close attention to the maturity schedule. GAAP requires companies to disclose the combined principal payments coming due in each of the next five fiscal years. A company with $2 billion maturing in a single year faces a very different refinancing problem than one whose maturities are spread evenly. Concentrated maturities, sometimes called maturity walls, are one of the most reliable early warnings of liquidity stress.
Collateral
The footnotes identify which assets are pledged against specific debt instruments. Secured debt backed by property, equipment, or receivables sits higher in the repayment hierarchy than unsecured obligations. Collateral details tell you who gets paid first in a worst case, and how much of the company’s asset base is already spoken for.
Covenants
Covenants are contractual restrictions lenders impose to protect their investment, and they come in two flavors. Maintenance covenants are tested on a regular schedule, typically quarterly, regardless of what the company does. Common examples include a maximum debt-to-EBITDA ratio or a minimum interest coverage ratio. Incurrence covenants are only tested when the company takes a specific action, like issuing new debt or paying a dividend. A company might breach an incurrence covenant’s leverage threshold because earnings fell, but if it hasn’t taken the triggering action, it’s still in compliance.
Covenants matter because breaching one can trigger a technical default even with every interest payment made on time. A technical default gives lenders the right to accelerate the loan, demanding the full balance immediately. In practice, lenders often negotiate waivers or amendments, but the threat alone can force expensive concessions. The covenants section tells you how much room the company has before it hits a tripwire.
What MD&A and Risk Factors Add
The footnotes give you the mechanics. The Management’s Discussion and Analysis (MD&A) section gives you management’s own reading. SEC rules require the MD&A to analyze the company’s liquidity and capital resources, including material cash requirements from known obligations, both for the next twelve months and beyond.2eCFR. 17 CFR 229.303 – (Item 303) Management’s Discussion and Analysis of Financial Condition and Results of Operations
This is where management explains how they plan to handle upcoming maturities. Refinancing with new debt? Drawing down cash? Planning an equity raise? The MD&A must also discuss known trends that could change the mix or relative cost of capital resources, including shifts between debt and equity financing and any off-balance-sheet arrangements.2eCFR. 17 CFR 229.303 – (Item 303) Management’s Discussion and Analysis of Financial Condition and Results of Operations
The Risk Factors section of the 10-K matters too, though it gets skimmed. Debt-related risks disclosed here include exposure to rising rates on variable-rate borrowings, potential covenant breaches, and the possibility that capital markets won’t be accessible when refinancing comes due. The language is often boilerplate. Compare risk factor disclosures across consecutive annual filings. When new debt risks appear, or existing ones get more specific, something has changed.
Obligations That Don’t Show Up on the Debt Line
The balance sheet captures a lot, but not everything that creates a future cash drain. Several obligations can be as consequential as traditional debt but live in different line items or only in the footnotes. If you stop at the long-term debt figure, you’ll miss them.
Operating lease liabilities now appear on the balance sheet under ASC 842, but short-term leases of twelve months or less and certain low-value leases can still be excluded. Large retailers and airlines with extensive lease portfolios deserve a careful look at the lease footnote for the full commitment schedule.
Pension and post-retirement benefit obligations represent promises to current and former employees that can run into the billions for older industrial companies. The funded status, meaning plan assets minus projected obligations, appears on the balance sheet, but the discount rate and expected return assumptions management uses deserve scrutiny. Small changes swing the liability figure by hundreds of millions.
Purchase commitments, take-or-pay contracts, and guarantees of subsidiaries’ or joint ventures’ debt often appear only in the footnotes under “Commitments and Contingencies.” The MD&A is also required to discuss off-balance-sheet arrangements that could have a material effect on the company’s financial condition. These obligations don’t carry interest rates or maturity dates the way a bond does, but they represent real future cash requirements that compete with debt service.
Making the Number Mean Something
Once you have the total debt figure, a few ratios turn it into something you can compare across companies and time.
Debt-to-equity divides total debt by shareholders’ equity; a result of 2.0 means two dollars of debt for every dollar of equity. Debt-to-assets divides total debt by total assets, showing how much of the asset base creditors have financed. Both are industry-sensitive: utilities and REITs routinely operate at leverage levels that would alarm investors in a software company.
Times interest earned (TIE) divides EBIT by interest expense. A ratio above 2.0 is generally considered healthy; approaching 1.0 means a modest earnings dip could leave interest uncovered.
Net debt-to-EBITDA is the ratio lenders and rating agencies watch most closely. It divides net debt by EBITDA, using EBITDA as a rough proxy for cash flow available to service debt. Below 3.0 is generally manageable; above 4.0 starts raising flags; above 6.0 enters territory the rating agencies and IMF consider elevated. Compare against the company’s own sector.
The debt service coverage ratio (DSCR) goes further by measuring whether cash flow covers both interest and principal, not just interest. It divides net operating income by total debt service. A DSCR of 1.0 means the company earns exactly enough to make its payments. Most lenders require a minimum of 1.2 to 1.25 as a loan condition; above 2.0 is typically considered strong.
Track the ratios across multiple reporting periods. A sudden spike in debt-to-equity, a tightening DSCR, or new risk factor language about covenant compliance all say something has changed. Companies that blow up rarely do so without warning. The warnings just tend to sit on page 87 of the 10-K.