What are long-term liabilities?

Long-term liabilities refer to obligations that a company is required to pay back over a period exceeding one year. This classification of debt typically includes items such as bonds payable, long-term leases, and long-term loans. By defining long-term liabilities in this way, it helps businesses and investors understand the financial commitments that extend beyond the current accounting period, influencing long-term financial planning and resource allocation.

Identifying long-term obligations is essential for assessing a company's financial health, as they require future cash outflows that can affect liquidity and capital structure. This concept contrasts sharply with short-term liabilities, which are due within one year, thus helping to characterize the time frame in which different financial commitments will impact the organization.