The Investing for Beginners Podcast - Your Path to Financial Freedom

Financials Demystified: Long Term Liabilities Explained

Jan 22, 2026

Discover the essentials of long-term liabilities and their impact on financial statements. Learn how to analyze operating lease liabilities and their significance in relation to profits. The hosts break down deferred taxes and their implications, using Microsoft as a case study. Understand the importance of debt laddering to minimize risk, while practical metrics like debt-to-equity and interest coverage ratios are introduced to help assess a company's financial health. Tune in for savvy insights that demystify these financial concepts!

44:33

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Episode notes

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ADVICE

Contextualize Lease Liabilities

Compare operating lease liabilities to profits and revenue to judge scale and risk.
Put lease totals in per-store terms to estimate rent burden and store economics.

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ADVICE

Estimate Store-Level Economics

Use per-store revenue and lease figures to estimate how much rent eats into store-level profit.
Compare labor and food costs alongside rent to assess true store profitability.

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ADVICE

Read Footnotes For Lease Details

Read footnotes (use Control-F) to see lease breakdowns between real estate and equipment.
Use those details to focus research on the most material lease components.

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Why Long-Term Liabilities Matter

03:45 • 1min

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Operating Lease Liabilities Explained

04:57 • 3min

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Putting Lease Liabilities in Context

07:27 • 1min

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Per-Store Economics for Restaurants

Deferred Taxes vs Long-Term Tax Liabilities

19:16 • 5min

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Recap: Leases and Tax Red Flags

24:10 • 35sec

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Peeling the Onion on Long-Term Debt

24:45 • 15sec

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Debt Laddering and Maturities

25:01 • 3min

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Cheap Capital as Competitive Advantage

ROIC vs Cost of Capital

36:15 • 3min

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Signals from Cash, Buybacks, and Piles of Cash

39:05 • 3min

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Debt Metrics: Debt-to-Equity and Net Debt/EBITDA

41:54 • 3min

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Quick Liquidity Checks and Interest Coverage

• Mentioned in 2 episodes

Seven Steps to Understanding the Stock Market

Andrew Sather

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This episode continues the Financials Demystified series with a practical, beginner-friendly breakdown of long-term liabilities on the balance sheet. Dave and Andrew focus on what these line items actually mean, why they matter, and how to use them to understand a company’s real financial risk.

They start with operating lease liabilities, what leases represent, why context matters, and how investors can compare lease obligations to profits, revenue, and even per-store economics. Then they move into tax liabilities, explaining the difference between deferred taxes and longer-term tax obligations (often tied to uncertain tax positions).

Key Topics Covered

Long-term liabilities basics and how they show up on the balance sheet
Operating lease liabilities and how to think about them
Deferred taxes vs long-term tax obligations
Long-term debt and why “laddering” maturities matters
Practical metrics to evaluate liabilities and debt risk

Timestamps

01:44 – Operating lease liabilities explained

04:00 – Putting lease liabilities in context with profits

10:26 – Restaurant metrics: revenue, labor costs, and food costs

13:09 – Deferred taxes and long-term tax liabilities (Microsoft example)

18:42 – Long-term debt “peel the onion” (Danaher example)

20:10 – Debt maturity schedules and why staggered maturities reduce risk

24:49 – What debt details reveal about management and capital allocation

27:33 – ROIC vs cost of capital and why the spread matters

32:49 – Key metrics: debt-to-equity and net debt to EBITDA

35:21 – Quick checks: cash vs total debt and interest coverage ratio

Resources Mentioned

The Value Spotlight Newsletter: https://einvestingforbeginners.com/value-spotlight-newsletter/

Have questions or want your story featured? Email the show at newsletter@einvestingforbeginners.com or comment below. Your feedback shapes the podcast!

Remember, invest with a margin of safety—emphasis on the safety. Have a great week, and we’ll talk to you next time.

Timestamps are generated by artificial intelligence, and are not 100% accurate depending on the platform used for listening.

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