On platforms like Dividend Data, you can find Short Term Debt for stocks. This helps you make informed investment decisions.
Definition:
Short-Term Debt refers to any borrowings or financial obligations that a company is required to pay back within the upcoming fiscal year. It includes bank loans, accounts payable, and other short-term borrowings.
Types of Short-Term Debt
Accounts Payable: Money owed to suppliers for goods or services received.
Short-Term Loans: Loans that are due for repayment within a year.
Current Portion of Long-Term Debt: The part of long-term debt that is due within the current year.
Importance of Short-Term Debt in Financial Analysis
Liquidity Assessment: Indicates a company’s ability to meet its short-term liabilities with its short-term assets.
Financial Health Indicator: High levels of Short-Term Debt might signal potential liquidity issues or financial stress.
Operational Efficiency: Reflects how well a company is managing its working capital and cash flow.
Short-Term Debt in Financial Ratios
Current Ratio: Total Current Assets divided by Total Current Liabilities, including Short-Term Debt, indicating liquidity.
Debt-to-Equity Ratio: Short-Term Debt as part of the total debt compared to shareholder equity.
Factors Affecting Short-Term Debt
Business Cycle: Seasonal businesses might have higher Short-Term Debt at certain times of the year.
Credit Terms: Changes in credit terms with suppliers can affect accounts payable.
Cash Flow Management: Efficient cash flow management can reduce the need for short-term borrowings.