Current Portion of Long Term Debt (CPLTD) - YouTube

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clicking the bell ican friends today we are going to learn a concept which is

known as the current portion of the long-term rate which is known as CP Ltd

on the balance sheet side well we are going to look at a graph over here of

Exxon Mobil the current portion of the long-term debt annual and non current

portion of the long-term debt as we move down what we see is that from 2010 to

2012 there is a tiff between long-term debt and the current and the non current

portion the current portion the long-term debt over here is quite high

as compared to R its greater than long non current portion of the long-term

debt as you can see this particular graph and the blue line well no issues

will understand this in a detail format let's begin at the very initial stage

what one needs to understand that you know the current portion of the

long-term debt or which is also known as your CP Ltd refers to that portion of

these forms balance sheet that keeps records of the total amount of the

long-term debt and that must be paid within the ongoing period or the ongoing

year so what can see the chart over here of the Exxon Mobil it tracks the current

portion of the long-term debt versus the non current portion of the long-term

debt of exam for the past 5 years so we note that during the 2016 time period

during the 2016 the exam mobile had 13.6 billion as you can

see of the current portion of the long-term debt as compared to

28.39 or 93 of the non current portion however in

the year of 2013 and 14 Exxon's current portion of the long-term debt was far

greater look at this this particular portion it was a far more greater than

that of the non current portion now my question is that is this good a bad for

Exxon's so no issues in this particular tutorial we are going to discuss the

current portion of the long-term debt or which you call as CP Ltd and answer the

the question that I will ask now what is the current portion of the long-term

debt that's the first thing we need to understand see debt is the obligation

because it is borrowed by one party another so the one who takes a loan is

the data and from whom the loan is taken is called the lender or the creditors right

so the organization or the corporates uses this debt for making large

purchases like such as for the plans building facilities and so on and so

forth know that this forms cannot for in the normal circumstances forever if

you see the debt is the only cheapest no I'm wrong not the only it is one of the

cheapest form of available to the forms and corporates for long term financing

because it provides an option to the borrower to paid it back a later date

with we shouldn't forget us it's interest however the long-term debts you

know has multiple forms includes like you know bonds

they have debentures secured notes mortgages notes and loans taken from the

banks and financial institutions so from the company's point of view the

long-term debt means that you know any financial obligation any financial

obligations which are lined up for a period which is greater than 12 months

is greater than 12 months so however the company often pays a portion of this

long-term obligations or liabilities within the current or ongoing year so

which is known as your current portion of our long-term debt right now there's

this company called Seadrill limited the current portion the

long-term debt this is the extract of the company of Seadrill limited Seadrill

limited is registered in or listed in NYC Stock Exchange has a long-term debt

standing at her closely to $9 billion dollars $9.8 billion dollars and

is expected to pay $3.1 billion in the current year you can see the

amount and hence it is recorded as 6.6 billion as a long-term debt and 3.1

billion as current portion of the long-term debt at the end of the fourth

quarter off for 2016 so as observed you know Seadrill balance sheet does not

paint a good picture because it's current possibly long-term debt has

increased by you can see from 1489 to

3195 that's closely to 110% a 15% on me on via basic it

is because you know seadrill does not have sufficient liquidity it's a cash

liquidity to cover its short-term borrowing right and the current

liabilities in other words Seadrill has a high amount of the current portion of

the you can say the long-term debt as compared to the liquidity such as cash

and cash balance and this suggests that you know Seadrill will find it difficult

to make its payment and pay off its a short-term obligations now as you can

see in this particular graph of Seadrill current portion as you know the thumb

rule states that you know company with a high number of the current portion of

the long-term debt as compared to the small cash positions has a higher risk

of default as you can see the Seadrill can pose to the long-term debt and the

seadrill is non-current portion of the long-term debt the data is right in

front of you we have the graph and you know same goes with the seadrill with

because they have a high number of its current portion of the long-term debt

and comparatively a low cash in that scenario as a result you know the higher

CP LD the company have was on an average of defaulting and accordingly to simply

WallStreet Seadrill proposed the earth debt restructuring plan to survive the

industry downturn as for the scheme the company plans to basically renegotiate

renegotiate what exactly they they worked on the plan of its borrowing with

the creditors and also has a plan to deferred most of its current portion of

the long-term debt but that's what was the term that was been placed on in

front of the meeting however this move had negative impact on its share price

performance because the company saw its share price are plunging down or falling

more than 15% last month and in fact it was this was the

second announcement regarding its debt restructuring as the company was not

able to please the creditors as for its earlier given debt other was closely to

30 December 2016 so this time the company you know pushed its deadline at

the end of April 27th right so in the case of the Seadrill the company is not

able to pay its current portion of its long-term debt due to its historical

week you can see that historical weakness in

the crude oil sector and poor market conditions like for instance the crude

oil prices crude oil prices fell more than 50% since the high of 100

per Exxon's was yeah closer to 100 per barrel in 2014 to close around it it flows down

50 per barrel at present due to the oversupply of the crude oil and you know

increases in the inventory in the United States so this was the circumtances they

know that led to you know a turmoil situation of cash flow and cash crunch

situation where the Sidra limited had to actually survive now you know how to get

to know if the company is risky in the investment well you can now analyze some

of the ratios like the current ratio you can also use some of the ratios like

debt equity ratio debt to equity ratio then you can also use a liquidity ratio

because that will also be helpful in your case for this particular ratio for

this particular thing so on lower note we have concluded in a really great

fashion we have learned about this particular topic so debt is we can say

the important composition of the company's total capital visit creates a

financial leverage which can multiply the returns of the investment provided

the return derived from the loans seeds or its is greater than the cost of loan

or debt basically however it all depends on the company because if the company is

utilizing the debt taken from the bank or the other financial institution in a

right manner meanwhile the current portion of the term that should be

treated as you know the current liquidity as it represents you know the

principal part of the debt payments so as a as a result the company's financial

positions you know sometimes becomes risky which is not encouraging sign for

the investors and then does so this ratio should be really in a maintained

situation so that's it for this particular topic if you have learned and

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