Interest bearing liabilities

Research
1

What is the best way to calculate interest bearing liabilities.

I have seen it calculated as short term debt + long term debt but most (if not all) short term debt will not be interest bearing.
So should I just use LTD only?

Thanks
Tony

2

The answer is really fuzzy. A lot of companies are paying interest on their short-term debts. Often at higher rates than their long-term debts. Other companies are paying off their short-term debts so soon that there won’t be any interest to speak of. And there are other possible interest-bearing liabilities besides debts. Can I ask what you’re looking for?

If you’re trying to eliminate companies with too high a debt load, I recommend comparing their total debt to their EBITDA and/or their operating cash flow. That’s what banks do when evaluating a company’s debt load.

3

I am exploring various debt ratios. One of those is debt to capital which is interest bearing debt to capital.
https://www.investopedia.com/terms/d/debt-to-capitalratio.asp

Maybe its not useful, but that’s what I want to find out.

4

Investopedia, in my experience, gives a lot of fuzzy and ill-thought-out information. A better resource is the CFI website. Check out Debt to Equity Ratio - How to Calculate Leverage, Formula, Examples . . . for the debt-to-capital ratio, just add debt to the denominator of the debt-to-equity ratio.

5

Thanks Yuval. Looks like a good resource.