Are both notes payables and account payables part of a company's total debt?

Question

For instance, when calculating total debt, we add up LT debt, current portion of LT Debt, do we include in our calculations, notes payable or accounts payable or both?

Answer 1

No.

Total debt is current and long-term notes payable. By some definitions, it includes anything that is interest-bearing (e.g. capital leases). However, the plain vanilla definition is just long-term and short-term notes payable.

Accounts payable is never part of a company's debt. That's "working capital".

Addendum: All "things above equity" is not debt. Yes, they are liabilities, but not necessarily debt. Dividends payable is not debt. Accrued wages payable is not debt. Taxes payable is not debt.

Answer 2

All the line items above shareholders equity portion of the balance sheet is debt. Therefore notes payable and accounts payable are part of the firms total debt.

Current debt (short-term) is any debt with terms < 1 year. So if the average term of notes payable is less than a year, then it should be part of the Current Debt computation.

Note: Creditor or suppliers normally extend credit (AP) to business on 30 - 90 terms.

Hope this helps