What proportion of total debt matures within one year. Below 25% is conservative. Above 50% creates significant refinancing risk, especially if credit markets tighten during an economic downturn.
Formula
Description
The proportion of total debt that matures within one year. High short-term debt ratios create refinancing risk because the company must regularly roll over its obligations. Companies with mostly long-term debt have more financial stability and predictability.
Interpretation
Below 25% is conservative. Above 50% means more than half the debt needs to be refinanced within a year, which creates significant risk if credit markets tighten. Watch this metric carefully in rising interest rate environments.
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