Book Value Of Debt Formula

Found in the current liabilities section of the balance sheet.

Book value of debt formula. Found in the long term liabilities section of the balance sheet. Current portion of long term debt. The formula is given by.

3 z x 1 t 1 x 2 t 2 x. If the result is higher than one that s a sign the company is carrying a large amount of debt. Found in the current liabilities section of the balance sheet.

In your question you were correct to identify that the book value of total debt is the value given to borrowings in the liabilities. Book value of debt formula below is the formula to calculate book value of debt book value of debt formula long term debt notes payable current portion of long term debt. Once you know the book value divide the value of the debt by the assets.

The formula for the market value of debt is e 1 1 1 r y r t 1 r y where e is the annual interest expense r is the cost of debt t is the total debt and y is the average maturity in years of the debt.