Book value of debt

The book value of debt is comprised of the following line items on an entity’s balance sheet:

The book value of debt does not include accounts payable or accrued liabilities, since these obligations are not considered to be interest-bearing liabilities.

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.

Related Courses

Business Ratios Guidebook 
Financial Analysis 
The Interpretation of Financial Statements