Debt quality
#08GUIDING QUESTION
How much debt falls due soon?
Debt quality measures the weight of the short term within the total.
01.What it is
Share of total debt that falls due in the short term. The more short-term debt, the greater the liquidity pressure.
02.Component masses
- Current liabilities
- Total liabilities
03.Formula
MAIN FORMULA
Debt quality: Current liabilities ÷ Total liabilities
04.Interpretation
- > 50% → heavy short-term pressure.
- < 30% → comfortable structure.
05.Related to
- Current ratio
- Interest coverage