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Definition of Long-Term Debt in Balance Sheet

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Explanation

Long-term debt is a debt item presented on the balance sheet. It is categorized as non-current liabilities because it is payable after more than one year. Long-term debts include 10,20,30 years of bonds, long-term bank loans, etc. Companies may have a portion that requires repayment within one year in long-term debt. That portion is shown as the “Current portion of long term debt” under Current liabilities in the balance sheet. For example, in 10-year bonds, Companies have to pay semiannual coupons to the debt holders. The coupon amount that needs to be paid in 1 year is kept as a “Current Portion of long term debt” under current liabilities.

Component of Long-Term Debt in Balance Sheet

As mentioned earlier, long-term debt has two components in the balance sheet. One under non-current liabilities and another under current liabilities. We know that long-term debts are payable in more than 1 year, such as 10 or 20 years bonds; As a result, companies categorize bonds under non-current liabilities, but a portion of these bonds is due for payment within a year. Therefore, that specific portion classifies under current liabilities.

Examples of Long-Term in Balance Sheet

Following are the examples are given below:

Example #1

Let’s assume Company XYZ was an unleveled company. It has just now taken a bank loan of $1,000,000 for 10 years. This bank loan will be equally amortized over 10 years. That means in the next 1 year, $100,000 must be paid, and the rest must be paid over 10 years. So below can be the liabilities portion of its balance sheet:

Liabilities  Amount

Accounts Payable $250,000

Accrued Liabilities $100,000

Current Portion of Long-term Debt $100,000

Current Liabilities $450,000

Long term Debt $900,000

Non-Current Liabilities $900,000

Total Liabilities $1,350,000

Pic: Liabilities portion of Company XYZ

Example #2

Walmart is a US multinational retail organization headquartered in Bentonville, Arkansas. Walmart was founded in 1962. Below is a snippet of its balance sheet from its 2023 annual report.

Source: Wallmart Inc Annual Report

As we can see here, as of 31st January 2023, it has a long-term debt of $43,714 million, which is almost similar to the long-term debt on 31st January 2023. However, the Current portion of long-term debt increased from $1,876 million to $5,362 million.

Below is the break up of its long-term debt:

Below is the break up of its long-term debt:

Source: Wallmart Inc Annual Report

Modeling of Long Term in Balance Sheet

As we have seen, the company will pay back $100,000 from the loan each year. So that amount will be shown in the “Current portion of long term debt”. Long-term debt will also get reduced by $100,000 each year. This process repeats until year 10, when there is only $100,000 remaining to be paid, and since that amount will be paid in the 10th year, that amount will be shown under current liabilities, and the long-term debt amount will be zero.

Use of Long-Term Debt in Balance Sheet

The main purpose of any kind of financing, whether that is equity or debt, is to raise capital to buy assets. That asset will eventually generate revenue for the business. Long-term debt can also be used to leverage the company, buy back the shares, and convert the company from public to private. Also, debt financing is cheaper than equity financing, so the company can prefer to raise capital via debt and not by equity.

Conclusion

Companies use long-term debt for various purposes that align with their strategy. Companies benefit from long-term debt as it can be repaid gradually over the years, and the cost of debt is lower than the cost of equity. However, companies must remain cautious to avoid becoming overleveraged, as this can make it challenging for them to fulfill their obligations and repay investors.

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Guide, Formula, Examples Of Debt/Ebitda

Debt/EBITDA Ratio

A leverage ratio that measures a company’s ability to pay off its debt

Written by

CFI Team

Published January 28, 2023

Updated July 7, 2023

What is the Net Debt to EBITDA Ratio?

The net debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio measures financial leverage and a company’s ability to pay off its debt. Essentially, the net debt to EBITDA ratio (debt/EBITDA) gives an indication as to how long a company would need to operate at its current level to pay off all its debt. The ratio is commonly used by credit rating agencies to determine the probability of a company defaulting on its debt.

Formula

The Debt to EBITDA ratio formula is as follows:

Where:

Net debt is calculated as short-term debt + long-term debt – cash and cash equivalents.

EBITDA stands for earnings before interest, taxes, depreciation, and amortization.

Practical Example of EBITDA Ratio

For example, McDonald’s Corporation reported the following figures for the fiscal year ending December 31, 2024:

The Debt to EBITDA for McDonald’s is calculated as follows:

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Interpretation

A low net debt to EBITDA ratio is generally preferred by analysts, as it indicates that a company is not excessively indebted and should be able to repay its debt obligations. Conversely, if the net debt to EBITDA ratio is high, it indicates that a company is heavily burdened with debt. That situation would lower the company’s credit rating and investors would, therefore, require higher yields on bonds to compensate for the higher default risk. For McDonald’s Corporation, Standard & Poor’s (S&P) assigned a credit rating of BBB+, Moody’s assigned a credit rating of Baa1, and Fitch assigned a credit rating of BBB:

Source: Information compiled on Capital IQ in 2023.

Generally, a net debt to EBITDA ratio above 4 or 5 is considered high and is seen as a red flag that causes concern for rating agencies, investors, creditors, and analysts. However, the ratio varies significantly between industries, as each industry differs greatly in capital requirements. As a result, it is best used to compare companies in the same industry. In a loan agreement between a company and a lender, the lender often requires the company to remain below a certain net debt to EBITDA ratio.

Key Takeaways

The net debt to EBITDA ratio measures a company’s ability to pay off debt with EBITDA.

The ratio is commonly used by credit rating agencies to assign a credit rating to a company.

A low ratio is preferred and indicates that the company is not excessively indebted.

A high ratio indicates that the company has high debt levels, and may, consequently, result in a lower credit rating (therefore mandating the company offer higher yields on bonds).

An ideal debt to EBITDA ratio depends heavily on the industry, as industries vary greatly in terms of average capital requirements. However, a ratio of greater than 5 is usually a cause for concern.

To ensure that a company is able to repay debt obligations, loan agreements typically specify covenants that dictate the range which a company’s net debt/EBITDA ratio can fall under.

Related Readings

Thank you for reading CFI’s explanation of the net debt to EBITDA ratio. CFI offers the Financial Modeling & Valuation Analyst (FMVA)™ certification program and other training for financial professionals. To learn more and expand your career, explore the additional relevant CFI resources below.

Uml Diagram Cheat Sheet And Reference Guide

In this UML Notation Cheat Sheet, you will learn:

Things in UML

A thing can be described as any real-world entity or an object. Things are divided into various categories in UML as follows,

Structural things

Behavioral things

Grouping things

Annotational things

Structural things

Structural things are all about the physical part of a system. It is the noun of a UML model, such as a class, object, interface, collaboration, use case, component, and a node.

Class :- A class is used to represent various objects. It is used to define the properties and operations of an object.

Object :- An object is an entity which is used to describe the behavior and functions of a system. The class and object have the same notations.

Example of Object Diagram :-The below UML object diagram contains two objects named Ferrari and BMW which belong to a class named as a Car. The objects are nothing but real-world entities that are the instances of a class.

Interface :- An interface is similar to a template without implementation details. A circle notation represents it. When a class implements an interface, its functionality is also implemented.

Behavioral things

They are the verbs of a UML model, such as interactions, activities and state machines. Behavioral things are used to represent the behavior of a system.

Interaction diagram :- Interaction diagrams are used to visualize the message flow between various components of a system.

Grouping things

It is the package which is used to group semantically related modeling elements into a single cohesive unit.

Annotational things

It is like a note, which may be written to the model to capture some vital information. It is similar to the yellow sticky note.

Relationships type in UML

The relationship allows you to show on a model how two or more things relate to each other.

Reflexive association :- Reflexive association states that a link or a connection can be present within the objects of the same class.

Directed association :- Directed association, the flow is directed. The association from one class to another class flows in a single direction only.

Dependency relationship :- It is one of the most important notations of UML. It defines the direction of a dependency from one object to another.

Generalization relationship :- It is also called as a parent-child chúng tôi type of relationship is used to represent the inheritance concept.

Realization relationship :- Realization relationship is widely used while denoting interfaces.

Realization can be represented in two ways:

Using a canonical form

Using an elided form

Composition :- Composite aggregation is described as a binary association decorated with a filled black diamond at the aggregate (whole) chúng tôi is not a standard UML relationship, but it is still used in various applications.

Aggregation :- aggregation relationship, the dependent object remains in the scope of a relationship even when the source object is chúng tôi aggregation is a subtype of an association relationship in UML.

Abstract Classes

It is a class with an operation prototype, but not the chúng tôi UML The only difference between a class and an abstract class is that the class name is strictly written in an italic font.

Lets see a complete UML class diagram example :-

ATMs system is very simple as customers need to press some buttons to receive cash. However, there are multiple security layers that any ATM system needs to pass. This helps to prevent fraud and provide cash or need details to banking customers.

UML Use Case Diagram

Use Case Diagram captures the system’s functionality and requirements by using actors and use cases. Use Cases model the services, tasks, function that a system needs to perform.

Use-case :- Use-cases are one of the core concepts of object-oriented modeling. They are used to represent high-level functionalities and how the user will handle the system.

Actor :- The actor is an entity that interacts with the system. A user is the best example of an actor.

Example of Usecase diagram

In the below use case diagram, there are two actors named student and a teacher. There are a total of five use cases that represent the specific functionality of a student management system. Each actor interacts with a particular use case.

UML State Machine Diagram

State machine:- It used to describe various states of a single component throughout the software development life cycle.

Their are 4 type of state in state machine :-

Initial state :-The initial state symbol is used to indicate the beginning of a state machine diagram.

Final state :- This symbol is used to indicate the end of a state machine diagram.

Decision box :- It contains a condition. Depending upon the result of an evaluated guard condition, a new path is taken for program execution.

Transition :- A transition is a change in one state into another state which is occurred because of some event.

Example of State Machine Diagrams :- There are a total of two states, and the first state indicates that the OTP has to be entered first. After that, OTP is checked in the decision box, if it is correct, then only state transition will occur, and the user will be validated. If OTP is incorrect, then the transition will not take place, and it will again go back to the beginning state until the user enters the correct OTP.

UML Activity Diagram

Activity diagram :- activity diagram is used to represent various activities carried out by different components of a system.

Initial states: The starting stage before an activity takes place is depicted as the initial state

Final states: The state which the system reaches when a specific process ends is known as a Final State

Decision box: It is a diamond shape box which represents a decision with alternate paths. It represents the flow of control.

Example of Activity Diagram :-Following diagram represents activity for processing e-mails.

Sequence Diagram

The purpose of a sequence diagram in UML is to visualize the sequence of a message flow in the system.A sequence diagram is used to capture the behavior of any scenario.

Collaboration diagram

Collaboration :- It is represented by a dotted ellipse with a name written inside it

Example of Collaboration diagram :-

Timing diagram

A timing diagram specifies how the object changes its state by using a waveform or a graph. It is used to denote the transformation of an object from one form into another form.

Example of Timing diagram :-

UML Component Diagram

Component :- A component notation is used to represent a part of the system.

Node :- A node can be used to represent a network, server, routers, etc. Its notation is given below.

Port :- A port is an interaction point between a classifier and an external environment. It groups semantically cohesive set of provided and required interfaces.

Example of Component diagram :-

Deployment Diagram

Deployment diagram :- A deployment diagram represents the physical view of a system.

A deployment diagram consists of the following notations:

A node

A component

An artifact

An interface

Example of a deployment diagram :- Following deployment diagram represents the working of HTML5 video player in the browser.

How To Monetize Instagram Page In The Long Run

It’s 2023, and Instagram is not just a fancy photo-sharing platform anymore. It has the potential to do so much more. People spend hours and hours on Instagram every day, just scrolling and consuming content. And right opposite to that, there’s a whole new world, a world of people making content for people to consume; a world where people earn money through Instagram. Now it’s up to you to decide which side of the coin you want to be. Why not both?

Here is How to Monetize Instagram Page 1. Connect with a Niche with Clarity:

This is the most fundamental, the simplest, yet the trickiest part. The requirement is simple. Select a niche that suits you the best, and who better to talk about you than yourself? But often, people get diverted by the shining light of the trendy online world and go for successful niches, but something with which they have no previous interactions or experience.

Brands usually connect with people for promotions of other activities if they are genuine and authentic, and think they understand that niche and space perfectly. Such accounts can be asked to be the face of brands and can be approached for various work opportunities, and the possibilities are endless.

So ask yourself the right questions, get your Niche clarity, and monetization opportunities will automatically come your way.

2. Route your followers to your source:

Instagram is a great way to express yourself. Once a genuine connection with your followers is established, they would usually consume whatever type of content comes their way from that particular account.

So if you have a monetization source outside your Instagram, you can use them in a great combination with this platform and route your followers there. This source can be your blog, your email list, your YouTube channel, your e-commerce website, etc.

Have an announcement post made on Instagram before your next blog, YouTube video, or any new product launch, and build up the anticipation. And in later stages, use the platform to showcase the crowd reaction, testimonials, takeaways, and any other thing related to it.

Smartly use the ‘Link in Bio’ feature and have CTAs in all your posts and stories. And in the case of a well-established page with decent followers, use the Swipe Up feature in stories.

Instagram, as a platform, is a really good partner for other platforms. Use it smartly to boost your monetization.

3. The Influencer Way:

The path toward a successful influencer is a long one. It requires consistency, quality content, providing value/entertainment to the followers, and so much more. But once there, your account can be monetized to the last post, story, Reel, or IGTV video.

4. Make your Profile a Portfolio:

As an artist or as a part of any sort of creative field, your Instagram profile can be made into an attractive portfolio featuring your best works. The profile link then can be sent in case of an interview, or any work request. These work really well in favour of:

Writers to showcase their writing style or their copies/content

Designers to show their work

Models/actors to showcase their photoshoot or clippings

Content Creators to upload their edits, videos, etc.

Musicians showcase their songs, covers, or albums.

Or any other artist to showcase their art of any kind.

So plan your Instagram feed to look attractive, and make your working portfolio earn through the platform.

5. Instagram Shopping:

Instagram Shopping came as a great boon to product and service pages on Instagram. Even without the feature, Instagram can be used as a catalogue to showcase your products and services, with a detailed description to go with it. You can either get customer details through DMs and make a transaction or route them to your website or payment gateway for conversion.

With the Instagram Shopping feature, the job has become much easier, and the account is monetized thoroughly. Even though the accessibility of the product is unlocked with certain requirements, the feature is a boon for product-based brands.

With each product post that you upload, you can have a tag, which takes them to a product page containing product descriptions, prices, images, and a link that routes them to the purchase page. So get going, set up your shopping page, and explore!

6. Consulting/Coaching:

Skilled at something? Know something that an average user does? Have years of experience in a particular field? Then why keep all that knowledge within yourself? Coaching and consulting is a booming business offline, and taking it online can elevate this to a whole new level.

People are always looking to upskill and get better at their field, and if you think you can provide value through your content, go for it. Sell your courses, have timing slots for your consultation, make videos on FAQs and provide value; people love content that helps them understand something better.

So hop on the digital train and start your online consulting and coaching business right away.

Conclusion

To all the people thinking Social Scrolling is an empty addiction that can lead to nothing, well, use the scrolling the right way, and you have a whole new world waiting for you.

There isn’t anything extra that you have to do, just be yourself, use your passion, skill, and experience, and earn in the Digital world. Instagram monetization can make it happen!

When was the last time you spent money through Instagram?

Heaven’s Vault Preview: Translating Long

I’m agonizing over a translation. What I’d thought was a simple piece of driftwood washed up on the riverbank is now a test, of sorts. The wood is old, worn down, but still there are remnants of symbols, letters in a language I’ve only seen twice before—and it’s my job to discern the intent. Where did this wood come from? Why did someone painstakingly carve letters into it?

Grasping at straws, I mutter something about “Wind” and plug that in as the translation. It doesn’t seem like a perfect fit, but…well, sometimes in Heaven’s Vault you just have to go with your gut.

Move over, Lara

IDG / Hayden Dingman

There’s something about Inkle’s games though, the way every tiny choice branches in a dozen different ways, the way the Ink Engine resurfaces small decisions in interesting ways. At GDC, Inkle’s Jon Ingold told me he’d seen four people run the demo and it played out four different ways. Having now run the demo four times myself, I believe him.

But even where the framework is the same, context can differ wildly. As you approach the gate into the ruins, an ivy-covered placard on the wall beckons. It’s likely the first translation players encounter in this build, and a relatively simple one, only three words. Still, it’s in a language wholly foreign—because it’s invented. As Inkle’s Joseph Humfrey told me last year, “You’re sort-of doing the process an archaeologist would if they looked at cuneiform.”

IDG / Hayden Dingman

Either works, and either is perfectly valid. There’s what looks like a greenhouse inside the ruins, and the area is obviously overflowing with plant life. “Garden” fits. But there’s also a vaguely religious-looking statue in the main courtyard, and further in the player encounters what seems like graves. “Temple,” then? Or hmm, perhaps they’re not graves but memorials. In that case, maybe garden is correct?

And yet it matters a lot. If the player approaches the ruins first and foremost as a temple, obviously any items within are infused with religious meaning. The aforementioned statue? Probably a god of some sort. Graves? That’d probably make this a cemetery of some sort. An innocuous carving of an eagle on the wall suddenly has to fit within the religious framework, and later translations might skew in that direction. A player might choose “eternity” over plain ol’ “death” for instance, hypothesizing an object has a loftier meaning.

IDG / Hayden Dingman

Maybe the player doesn’t even spot this translation at all. I didn’t, my first time. There’s a path around the side, and I made a beeline for it—assuming, rightfully, that the gate was locked. Thus I missed both “Temple” and “Garden,” relying on my own instincts to tell me the story of these ruins.

One choice, three different experiences. This is the magic of the Ink Engine: Small choices, so small they’re insignificant, that still manage to have widespread repercussions because they affect the way the player thinks. Temple, garden, or no context at all, it doesn’t affect how events play out, but it affects the context in which those events take place, and thus in some small way it affects everything.

IDG / Hayden Dingman

There are more obvious constraints too. The demo ends with a resurrection, of sorts. Turns out the graves/memorials/whatever are actually projectors of some sort, and once powered are able to summon the preserved consciousness of the deceased. A conversation ensues, with the person not-wholly-aware they’re long dead and Aliya dancing around that fact to extract information.

Bottom line

What’s most amazing about Heaven’s Vault though is that every path feels valid. Having now gone through the demo four times, as I said, I’ve come away each time feeling like “Well, actually maybe that was the correct one.” Translations that seemed ludicrous my first time through seem less outlandish in a different light, and occasionally there’s a eureka moment where new information changes the context of the old and prompts a reexamination of all clues to date.

It’s—and I don’t say this lightly—like nothing I’ve ever played before. Bound for a niche audience of linguistics wannabes maybe, but rarely has a game provoked so much emotional investment from me with a handful of scribbled symbols. Safe to say Heaven’s Vault is one of my most anticipated games of 2023, and Inkle one of the most exciting studios working today.

Scientists Create An Ai From A Sheet Of Glass

How to make artificially wise glass that can perceive pictures AI Glass

Things being what they are, you needn’t bother with a computer to make an artificial intelligence. Truth be told, you don’t require electricity.

In an unprecedented piece of left-field look into, researchers from the University of Wisconsin–Madison have figured out how to make artificially wise glass that can perceive pictures with no requirement for sensors, circuits, or even a power source — and it would one be able to day spare your phone’s battery life.

“We’re continually contemplating how we provide vision for machines later on, and envisioning application explicit, mission-driven technologies,” scientist Zongfu Yu said in an official statement. “This progressions nearly everything about how we configuration machine vision.”

Also read:- The Role of Network Evolution in Artificial Intelligence

Numbers Game

In a proof-of-idea concentrate published on Monday in the diary Photonics Research, the analysts portray how they made a sheet of “savvy” glass that could distinguish manually written digits.

To accomplish that accomplishment, they begun by setting various sizes and states of air rises at explicit spots inside the glass. At that point they included bits of deliberately set light-engrossing materials, including graphene.

At the point when the group at that point recorded a number, the light reflecting off the digit would enter one side of the glass. The air pockets and pollutions would dissipate the lightwaves in specific ways relying upon the number until they achieved one of 10 assigned spots — each relating to an alternate digit — on the contrary side of the glass.

The glass could basically tell the specialist what number it saw — at the speed of light and without the requirement for any conventional figuring power source.

“We’re familiar with digital figuring, however this has widened our view,” Yu said. “The wave elements of light proliferation provide another approach to perform simple artificial neural figuring.”

Related: – Artificial Intelligence to Double Innovation Speed in India by 2023: Study

Face Time

Teaching machines to precise “see” will be vital to accomplishing our objectives for artificial intelligence — machine vision assumes a job in everything from self-sufficient vehicles to conveyance robots.

This “savvy” glass probably won’t almost certainly complete estimations complex enough for those utilizations, however the group has one conceivable application for it as a top priority: smartphone security.

Currently, when you endeavor to open a phone utilizing face ID, an AI inside the gadget needs to run a calculation, depleting battery power simultaneously. Attach a prepared sheet of this keen glass to the front of the gadget, and it’ll have the option to assume control over the errand without pulling any power from the phone’s battery.

“We could conceivably utilize the glass as a biometric lock, tuned to perceive just one individual’s face,” Yu said. “When manufactured, it would keep going forever without requiring power or web, which means it could protect something for you even following a great many years.”

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