Non-Current Liabilities
Liquidity
Industry:
Sector Agnostic
Short Definition
Non-current liabilities (long-term liabilities) are obligations the company does not expect to settle within 12 months (or the operating cycle, if longer). Think long-term debt, lease liabilities (non-current portion), deferred tax liabilities, long-term provisions, pensions, and deferred revenue due after a year.
Short Definition
Non-current liabilities (long-term liabilities) are obligations the company does not expect to settle within 12 months (or the operating cycle, if longer). Think long-term debt, lease liabilities (non-current portion), deferred tax liabilities, long-term provisions, pensions, and deferred revenue due after a year.
Short Definition
Non-current liabilities (long-term liabilities) are obligations the company does not expect to settle within 12 months (or the operating cycle, if longer). Think long-term debt, lease liabilities (non-current portion), deferred tax liabilities, long-term provisions, pensions, and deferred revenue due after a year.
Why it matters for Investors
Solvency & leverage: Shows structural debt/obligations beyond the near term.
Refinancing risk: Pairs with maturity tables to spot future “walls.”
Valuation math: Included in Enterprise Value and leverage ratios (e.g., Debt/EBITDA).
Why it matters for Investors
Solvency & leverage: Shows structural debt/obligations beyond the near term.
Refinancing risk: Pairs with maturity tables to spot future “walls.”
Valuation math: Included in Enterprise Value and leverage ratios (e.g., Debt/EBITDA).
Why it matters for Investors
Solvency & leverage: Shows structural debt/obligations beyond the near term.
Refinancing risk: Pairs with maturity tables to spot future “walls.”
Valuation math: Included in Enterprise Value and leverage ratios (e.g., Debt/EBITDA).
Formula
Practical considerations -
12-month (or operating-cycle) rule: Classify as non-current only if settlement is beyond 12 months or beyond the normal operating cycle if that’s longer (e.g., certain construction/defense contracts).
Current portion of long-term debt: Always split out the next 12 months of principal as current; the remainder is non-current.
Refinancing & covenant breaches (timing matters):
IFRS: To keep non-current, you must have the unconditional right to defer settlement at the reporting date. Waivers/refinancing arranged after period-end don’t help.
US GAAP: A short-term obligation may remain non-current if, before the financial statements are issued/available to be issued, you complete a long-term refinancing or obtain a waiver that defers payment >12 months (subject to ASC 470 criteria).
Leases (ASC 842 / IFRS 16): Recognize a lease liability and split it into current and non-current based on the timing of required payments.
Deferred taxes: Most DTLs are non-current under both IFRS and US GAAP (US GAAP presents all deferred taxes as non-current).
Deferred revenue (long-dated): Performance obligations due after 12 months belong in non-current deferred revenue.
Contingencies & provisions: Record when probable and reasonably estimable (US GAAP) / present obligation with probable outflow and reliably measurable (IFRS). Classify current vs non-current based on expected settlement.
Discounting: Some long-term obligations (e.g., AROs) are present-valued and then accrete over time; ensure the balance is split correctly between current and non-current if required by policy.
Presentation consistency: Use the same classification policy period-to-period and disclose major classes of non-current liabilities clearly.
Formula
Practical considerations -
12-month (or operating-cycle) rule: Classify as non-current only if settlement is beyond 12 months or beyond the normal operating cycle if that’s longer (e.g., certain construction/defense contracts).
Current portion of long-term debt: Always split out the next 12 months of principal as current; the remainder is non-current.
Refinancing & covenant breaches (timing matters):
IFRS: To keep non-current, you must have the unconditional right to defer settlement at the reporting date. Waivers/refinancing arranged after period-end don’t help.
US GAAP: A short-term obligation may remain non-current if, before the financial statements are issued/available to be issued, you complete a long-term refinancing or obtain a waiver that defers payment >12 months (subject to ASC 470 criteria).
Leases (ASC 842 / IFRS 16): Recognize a lease liability and split it into current and non-current based on the timing of required payments.
Deferred taxes: Most DTLs are non-current under both IFRS and US GAAP (US GAAP presents all deferred taxes as non-current).
Deferred revenue (long-dated): Performance obligations due after 12 months belong in non-current deferred revenue.
Contingencies & provisions: Record when probable and reasonably estimable (US GAAP) / present obligation with probable outflow and reliably measurable (IFRS). Classify current vs non-current based on expected settlement.
Discounting: Some long-term obligations (e.g., AROs) are present-valued and then accrete over time; ensure the balance is split correctly between current and non-current if required by policy.
Presentation consistency: Use the same classification policy period-to-period and disclose major classes of non-current liabilities clearly.
Formula
Practical considerations -
12-month (or operating-cycle) rule: Classify as non-current only if settlement is beyond 12 months or beyond the normal operating cycle if that’s longer (e.g., certain construction/defense contracts).
Current portion of long-term debt: Always split out the next 12 months of principal as current; the remainder is non-current.
Refinancing & covenant breaches (timing matters):
IFRS: To keep non-current, you must have the unconditional right to defer settlement at the reporting date. Waivers/refinancing arranged after period-end don’t help.
US GAAP: A short-term obligation may remain non-current if, before the financial statements are issued/available to be issued, you complete a long-term refinancing or obtain a waiver that defers payment >12 months (subject to ASC 470 criteria).
Leases (ASC 842 / IFRS 16): Recognize a lease liability and split it into current and non-current based on the timing of required payments.
Deferred taxes: Most DTLs are non-current under both IFRS and US GAAP (US GAAP presents all deferred taxes as non-current).
Deferred revenue (long-dated): Performance obligations due after 12 months belong in non-current deferred revenue.
Contingencies & provisions: Record when probable and reasonably estimable (US GAAP) / present obligation with probable outflow and reliably measurable (IFRS). Classify current vs non-current based on expected settlement.
Discounting: Some long-term obligations (e.g., AROs) are present-valued and then accrete over time; ensure the balance is split correctly between current and non-current if required by policy.
Presentation consistency: Use the same classification policy period-to-period and disclose major classes of non-current liabilities clearly.
Worked Example
Non-current liabilities | Amount |
|---|---|
Long-term debt (net of current portion) | $100M |
Lease liabilities (non-current) | $40M |
Deferred tax liabilities | $60M |
Long-term deferred revenue | $25M |
EBITDA | $35M |
Notes:
Two paths, same result: EBITDA via EBIT + D&A should match EBITDA via Net Income
+ Interest + Taxes + D&A.D&A is total: Add back all depreciation & amortization (whether booked in COGS or OpEx).
Non-cash vs cash: D&A is non-cash; EBITDA still ignores working capital swings, taxes, and capex.
One-offs: Exclude one-offs only in Adjusted EBITDA (not plain).
List each add-back (restructuring, impairments, gains on asset sales, M&A costs) and reconcile.Capitalized costs: Capitalizing software or commissions lowers OpEx today and raises amortization later
— plain EBITDA can look better near-term; explain if material.Leases: If you report under IFRS 16, note that EBITDA is structurally higher vs pre-2019;
consider a comparison view if helpful. Under US GAAP (ASC 842), operating leases
typically don’t boost EBITDA.
Worked Example
Non-current liabilities | Amount |
|---|---|
Long-term debt (net of current portion) | $100M |
Lease liabilities (non-current) | $40M |
Deferred tax liabilities | $60M |
Long-term deferred revenue | $25M |
EBITDA | $35M |
Notes:
Two paths, same result: EBITDA via EBIT + D&A should match EBITDA via Net Income
+ Interest + Taxes + D&A.D&A is total: Add back all depreciation & amortization (whether booked in COGS or OpEx).
Non-cash vs cash: D&A is non-cash; EBITDA still ignores working capital swings, taxes, and capex.
One-offs: Exclude one-offs only in Adjusted EBITDA (not plain).
List each add-back (restructuring, impairments, gains on asset sales, M&A costs) and reconcile.Capitalized costs: Capitalizing software or commissions lowers OpEx today and raises amortization later
— plain EBITDA can look better near-term; explain if material.Leases: If you report under IFRS 16, note that EBITDA is structurally higher vs pre-2019;
consider a comparison view if helpful. Under US GAAP (ASC 842), operating leases
typically don’t boost EBITDA.
Worked Example
Non-current liabilities | Amount |
|---|---|
Long-term debt (net of current portion) | $100M |
Lease liabilities (non-current) | $40M |
Deferred tax liabilities | $60M |
Long-term deferred revenue | $25M |
EBITDA | $35M |
Notes:
Two paths, same result: EBITDA via EBIT + D&A should match EBITDA via Net Income
+ Interest + Taxes + D&A.D&A is total: Add back all depreciation & amortization (whether booked in COGS or OpEx).
Non-cash vs cash: D&A is non-cash; EBITDA still ignores working capital swings, taxes, and capex.
One-offs: Exclude one-offs only in Adjusted EBITDA (not plain).
List each add-back (restructuring, impairments, gains on asset sales, M&A costs) and reconcile.Capitalized costs: Capitalizing software or commissions lowers OpEx today and raises amortization later
— plain EBITDA can look better near-term; explain if material.Leases: If you report under IFRS 16, note that EBITDA is structurally higher vs pre-2019;
consider a comparison view if helpful. Under US GAAP (ASC 842), operating leases
typically don’t boost EBITDA.
Best Practices
Disaggregate clearly: Debt, leases, deferred revenue, provisions, pensions, derivatives.
Maturity & sensitivity tables: Show debt/lease maturities and provision roll-forwards.
Covenant & collateral disclosure: Summarize key terms/thresholds.
Consistency: Apply the same classification and measurement policies period to period.
Best Practices
Disaggregate clearly: Debt, leases, deferred revenue, provisions, pensions, derivatives.
Maturity & sensitivity tables: Show debt/lease maturities and provision roll-forwards.
Covenant & collateral disclosure: Summarize key terms/thresholds.
Consistency: Apply the same classification and measurement policies period to period.
Best Practices
Disaggregate clearly: Debt, leases, deferred revenue, provisions, pensions, derivatives.
Maturity & sensitivity tables: Show debt/lease maturities and provision roll-forwards.
Covenant & collateral disclosure: Summarize key terms/thresholds.
Consistency: Apply the same classification and measurement policies period to period.
FAQs
Why did long-term debt move to current?
A covenant breach or upcoming maturity (within 12 months) requires reclassification—unless waived in time.Is deferred revenue ever non-current?
Yes, when the related service/goods will be delivered after 12 months.Are all deferred taxes non-current?
Under US GAAP: yes. Under IFRS: depends on expected reversal (often non-current, but follow policy).Do leases always show up here?
Yes, most leases create a liability split into current and non-current portions (ASC 842 / IFRS 16).Are derivative liabilities non-current?
They’re classified by expected settlement; long-dated portions are non-current.
FAQs
Why did long-term debt move to current?
A covenant breach or upcoming maturity (within 12 months) requires reclassification—unless waived in time.Is deferred revenue ever non-current?
Yes, when the related service/goods will be delivered after 12 months.Are all deferred taxes non-current?
Under US GAAP: yes. Under IFRS: depends on expected reversal (often non-current, but follow policy).Do leases always show up here?
Yes, most leases create a liability split into current and non-current portions (ASC 842 / IFRS 16).Are derivative liabilities non-current?
They’re classified by expected settlement; long-dated portions are non-current.
FAQs
Why did long-term debt move to current?
A covenant breach or upcoming maturity (within 12 months) requires reclassification—unless waived in time.Is deferred revenue ever non-current?
Yes, when the related service/goods will be delivered after 12 months.Are all deferred taxes non-current?
Under US GAAP: yes. Under IFRS: depends on expected reversal (often non-current, but follow policy).Do leases always show up here?
Yes, most leases create a liability split into current and non-current portions (ASC 842 / IFRS 16).Are derivative liabilities non-current?
They’re classified by expected settlement; long-dated portions are non-current.
Related Metrics
Parents: Total Liabilities.
Children / Components:
Long-term debt: Bank loans, bonds, convertible notes (non-current portion).
Lease liabilities (non-current): Under ASC 842 / IFRS 16.
Deferred tax liabilities: Generally non-current under US GAAP.
Long-term provisions: Warranties beyond 12 months, legal/environmental (ARO), customer refunds expected after a year.
Pension/other post-employment obligations.
Long-term deferred revenue: Performance obligations to be satisfied after 12 months.
Contingent consideration (M&A), long-dated derivative liabilities (if not current).
Commonly mistaken for:
Total debt (debt is a subset; non-current liabilities are broader)
Current liabilities (timing cutoff differs)
Off-balance-sheet commitments (disclosed, not recognized unless criteria met).
Related Metrics
Parents: Total Liabilities.
Children / Components:
Long-term debt: Bank loans, bonds, convertible notes (non-current portion).
Lease liabilities (non-current): Under ASC 842 / IFRS 16.
Deferred tax liabilities: Generally non-current under US GAAP.
Long-term provisions: Warranties beyond 12 months, legal/environmental (ARO), customer refunds expected after a year.
Pension/other post-employment obligations.
Long-term deferred revenue: Performance obligations to be satisfied after 12 months.
Contingent consideration (M&A), long-dated derivative liabilities (if not current).
Commonly mistaken for:
Total debt (debt is a subset; non-current liabilities are broader)
Current liabilities (timing cutoff differs)
Off-balance-sheet commitments (disclosed, not recognized unless criteria met).
Related Metrics
Parents: Total Liabilities.
Children / Components:
Long-term debt: Bank loans, bonds, convertible notes (non-current portion).
Lease liabilities (non-current): Under ASC 842 / IFRS 16.
Deferred tax liabilities: Generally non-current under US GAAP.
Long-term provisions: Warranties beyond 12 months, legal/environmental (ARO), customer refunds expected after a year.
Pension/other post-employment obligations.
Long-term deferred revenue: Performance obligations to be satisfied after 12 months.
Contingent consideration (M&A), long-dated derivative liabilities (if not current).
Commonly mistaken for:
Total debt (debt is a subset; non-current liabilities are broader)
Current liabilities (timing cutoff differs)
Off-balance-sheet commitments (disclosed, not recognized unless criteria met).
Index