Noncurrent liabilities

Definition

Noncurrent liabilities are financial obligations of a company that are due more than one year in the future. These include long-term debt, deferred tax liabilities, and pension obligations.

5 Must Know Facts For Your Next Test

1. Noncurrent liabilities appear on the balance sheet under the section for long-term liabilities.
2. Examples include bonds payable, loans payable, and long-term lease obligations.
3. They are essential for assessing a company's long-term financial health and leverage.
4. The distinction between current and noncurrent liabilities impacts liquidity ratios like the current ratio and quick ratio.
5. Noncurrent liabilities can influence a company's credit rating and borrowing costs.

Review Questions

• What is the primary difference between current and noncurrent liabilities?
• Why is it important for investors to understand a company’s noncurrent liabilities?
• Give three examples of typical noncurrent liabilities found on a balance sheet.

Related terms

Current Liabilities:

Short-term financial obligations due within one year.

Long-term Debt: Debt that is due for repayment beyond one year from the date of the balance sheet.

Deferred Tax Liabilities: Taxes owed by a company that will be paid in future accounting periods.