by 
The Curious Bag
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Short-term is debt incurred by a company that is due within one year. Short-term debt is often analyzed to get a picture of a company's overall financial health.
Identification
Debt refers to loans and financial obligations that require repayment, and includes interest payments.
Significance
Accounts that record debts show in the current liabilities portion of a company's balance sheet. Short-term debt can be used to calculate a company's financial health overone year.
Including Long-Term Debt
While short-term debts are due within 12 months, there also may be a part of long-term debt included in the account. This amount pertains to payments that must be made on any long-term debt in the same 12-month period.
Considerations
The amount of short-term dept a company has is very important when determining its financial health. If the debt is larger than the company's cash equivalents, this indicates a potential financial problem where the company may not have enough capital to pay off its short-term debts.
Expert Insight
The National Bureau of Economic Research and other institutes have conducted studies and research into the relationship of too much overall short-term debt as it relates to larger financial markets and economic health of states and nations.
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