Dr. Paul Borosky, DBA, MBA
Business Consultant & Author
Guide 16 of 34 · The Balance Sheet
Short-Term vs. Long-Term Debt on a Balance Sheet
Due this year, or due later. That split is the whole story.
Debt due within 12 months is short-term. Everything after that is long-term. The line between them tells you how much pressure is coming soon and how much risk the company carries for years. Apple cut its long-term debt by about $31 billion in five years. That is not what it did before.
Last Updated: 10/27/2026 · Written by Dr. Paul Borosky, DBA, MBA
The Short Answer
What Is the Difference Between Short-Term and Long-Term Debt?
Textbook Definition
Short-term debt is borrowing due within 12 months, including notes payable, commercial paper, and the current portion of long-term debt. It is a current liability. Long-term debt is borrowing with maturities beyond 12 months, such as bonds and term loans.
In Plain English
If it has to be paid back within a year, it is short-term. If it can wait longer, it is long-term. Each year, the slice of long-term debt coming due moves up into short-term debt.
Short-Term Debt (Apple)
Notes Payable + Current Portion of Long-Term Debt
Fiscal 2025: 7,979 + 12,350 = $20,329M
Long-Term Debt Share
Long-Term Debt ÷ Total Assets
Fiscal 2025: 21.8%
Short-term debt sits in current liabilities, near the top of the liabilities side of the balance sheet. Long-term debt sits below it, with the other long-term liabilities.
One Real Company
Apple’s Debt, 2021 to 2025
Short-term debt bounced around. Long-term debt fell every single year.
| Line | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Notes payable | 7,979 | 9,967 | 5,985 | 9,982 | 6,000 |
| Current portion of long-term debt | 12,350 | 10,912 | 9,822 | 11,128 | 9,613 |
| Short-term debt | 20,329 | 20,879 | 15,807 | 21,110 | 15,613 |
| Long-term debt | 78,328 | 85,750 | 95,281 | 98,959 | 109,106 |
| Long-term debt, % of total assets | 21.8% | 23.5% | 27.0% | 28.1% | 31.1% |
| Debt ratio | 27.5% | 29.2% | 31.5% | 34.0% | 35.5% |
Source: Apple Form 10-K filings as analyzed in the book. $ millions. Debt ratio = total debt ÷ total assets.
The Method
How to Read a Company’s Debt in 5 Steps
Add up short-term debt.
Notes payable, commercial paper, and the current portion of long-term debt. Apple’s was $20.3 billion in 2025.
Check it against cash.
Short-term debt is due soon. Apple had about $54.7 billion of cash and short-term investments to cover it.
Read the long-term trend.
Rising long-term debt means more borrowing or funding operations with loans. Falling means paying down. Apple fell every year.
Divide by total assets.
The percentage shows how much of the company is funded by borrowing. Apple went from 31.1% to 21.8%.
Check interest coverage.
Can operating profit cover the interest bill? Apple covered it 29 to 41 times over in the years it reported interest separately.
Why Paying Down Debt Matters
Less debt means smaller interest payments and less risk if sales slow. Apple had been loading up on long-term debt in earlier years. In this period it reversed course. That shows up in every leverage ratio, including debt-to-equity.
Compare It
Apple vs. Microsoft: Bigger Company, Less Debt
| Latest fiscal year | Apple | Microsoft |
|---|---|---|
| Long-term debt | $78B | $40B |
| Total assets | $359B | $619B |
Microsoft’s fiscal year ends in June, Apple’s in September.
Microsoft is now the larger company by total assets, yet it carries about half of Apple’s long-term debt. Both have been paying debt down. Apple simply leans on borrowed money more. Size alone never tells you who carries more debt.
Why Companies Borrow
Why Would a Company Use Short-Term Debt at All?
Short-term borrowing has two very different stories behind it, and the balance sheet alone will not tell you which one you are looking at.
The worrying story: the company is not bringing in enough cash to pay its bills, so it borrows to cover the gap. If short-term debt keeps climbing year after year while cash shrinks, that is a company leaning on loans to stay current. That can turn dire fast.
The routine story: a large, healthy company issues commercial paper and rolls over maturing bonds as normal cash management. Its short-term debt rises and falls a little each year, but the amounts are small next to the cash it generates. That is Apple. Its short-term debt moved between $15.6 billion and $21.1 billion while it produced more than $100 billion a year in operating cash.
Long-term debt has its own logic. Companies borrow long to fund things that last, like buildings, equipment, or a big buyback program, and pay it back over many years. A steady long-term debt level can mean a company has found the capital structure it wants. A rising one means more risk. A falling one, like Apple’s, means less.
- Rising short-term debt plus falling cash: look closer.
- Steady short-term debt with strong cash flow: routine.
- Falling long-term debt as a share of assets: lower risk.
Beginner Traps
What Do Beginners Get Wrong About Debt on a Balance Sheet?
- Forgetting the current portion of long-term debt is short-term debt.
- Ignoring long-term debt because nothing is due this year.
- Reading dollars instead of the share of total assets.
- Assuming all debt is bad. Used well, it boosts returns.
- Missing interest coverage, the real test of debt risk.
- Lumping interest-free accruals in with interest-bearing loans.
How the Book Grades Apple’s Debt
From the Book
A Healthy, Conservative Move
Balance Sheet · Long-Term Debt
Paying It Down
Reducing long-term debt lowers a company’s risk and its interest costs, so this is a healthy, conservative move by management.
Every liability on Apple’s balance sheet, the debt ratios that test them, and a grade for each.
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Short-Term and Long-Term Debt Questions
Is the current portion of long-term debt short-term debt?
Where is long-term debt on a balance sheet?
Is it good for a company to pay down long-term debt?
Keep Going
Related Guides
Debt connects the balance sheet to the leverage ratios.
Written by Dr. Paul Borosky, DBA, MBA, business consultant, author, and adjunct finance instructor with an MBA focused in finance.
This page is for general educational purposes only. It is not investment, financial, tax, accounting, or legal advice, and nothing here is a recommendation to buy or sell any security. Apple and Microsoft figures come from their public filings as analyzed in the book. Apple and Microsoft are trademarks of their respective owners, and this page is not affiliated with or endorsed by either company.