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In the Margin of Safety calculations, what should be included under Interest Bearing Liabilities?

In the Margin of Safety calculations, what should be included under Interest Bearing Liabilities?

Interest bearing liabilities are what the company owes that it pays interest on.

You list the headings available to you on the HSBC site. Here is how I would see them, though bear in mind that I am not a qualified accountant:

Trade Creditors - generally not interest bearing. These are the amounts owing by the company on normal day to day purchases from suppliers. Suppliers usually allow a period in which you must pay. Only in rare cases is interest charged if payment is not made on time.

Current Borrowings - Definitely interest bearing.

Other Current Liabilities - Probably not interest bearing, but it might be worthwhile to look at any notes to the accounts in the company's annual report if the item is large. If it is quite small, don't worry about it.

Non-Current Borrowings - Definitely interest bearing

Other Non-Current Liabilities - Probably not interest bearing, but it might be worthwhile to look at any notes to the accounts in the company's annual report if the item is large. If it is quite small, don't worry about it.

You can generally access a company's annual report by finding the company on www.asx.com.au and clicking on their web site.

www.asx.com.au will also give you contact details for the company. If an item is large and you are in doubt, phone the company and ask.

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