| Posted by: Joan C. Oct 21 2002, 09:04 PM |
Hi: Nice site
Can you tell me what curent portion of long term debt is and how to calculate it.
thanks
|
| Posted by: loanuniverse Oct 23 2002, 10:07 AM |
Hello Joan:
Current Portion of Long-Term Debt CPLTD is the principal portion of a loan due in the next twelve months. This is much better explained with an example. Suppose that you own a company called MyCompany, Inc. and you get a loan from The bank for $100,000. This loan will be amortized over ten years and your payment will be $1,000 a month.
For simplicity purposes, we will assume that out of every payment $800 go to repay principal and $200 go to interest. Being that CPLTD deals with the portion due during the next twelve months in order to calculate it all I would have to do is multiply $800 x 12 = $9,600. Therefore, the day that you close on this loan and the bank deposits the $100,000 in your checking account, your balance sheet would look like this.
ASSETS
Current assets:
Cash: $100,000
LIABILITIES
Current Liabilities:
CPLTD: $9,600
Long-term Liabilities:
Bank Loan: $90,400
Why is it important to know CPLTD?
Well, since CPLTD is due very soon (within the next year), it is important to know if the company is going to be able to have enough cash flow to meet this obligation.
I hope this helps, thanks for the visit.
|
|
|
