Short-term debt ratio


This indicator measures in percentage terms the relative weight of short-term financing capital sources on both the short-term and the long-term capital sources of the company.

On the other hands the ratios is the outcome of current liabilities divided by current liabilities and non current liabilities.

This formula reveals an important information for fundamental analysis and machine learning as it stands in the composition of the leveraged capital structure either of the industry and the company itself.

As a fact of the matter, the financial leverage is the size of debt in the company's capital structure and the capital structure is the mix between long term sources of founds used by the company to run its business activity.

So that this ratio can give useful information to creditors and investors along their fundamental analysis since an excessive level of debt may also make it difficult for a company to borrowing funds at a reasonable rate during thigh money market and deep economic downturn.   



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