Short-Term Debt

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What is the definition of Short-Term Debt?

Financial obligations that are due within one year and are classified as current liabilities on a company's balance sheet.

Using Short-Term Debt in an Example

A company might have short-term debt in the form of a line of credit that is used to cover operational expenses such as payroll and inventory purchases. This debt is expected to be paid off within the fiscal year using the company's liquid assets.

Using Short-Term Debt in a sentence

The CFO reviewed the balance sheet and noted that the increase in short-term debt was due to the recent loan taken to upgrade their manufacturing equipment.

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