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:

The following liability section of a balance sheet exhibit indicates where these debt items are located on 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.

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