1. What is Debt Calculation?

Total debt calculation is the sum of all short-term and long-term financial obligations a company or individual owes. It provides a comprehensive view of financial liabilities.

2. How Does the Calculator Work?

The calculator uses the simple debt equation:

Where:

• Short Term Debt — Obligations due within one year (accounts payable, short-term loans, etc.)
• Long Term Debt — Obligations due in more than one year (mortgages, bonds, long-term loans, etc.)

Explanation: This simple addition provides the total debt burden, which is crucial for financial analysis and planning.

3. Importance of Debt Calculation

Details: Calculating total debt is essential for assessing financial health, determining debt ratios, evaluating creditworthiness, and making informed financial decisions.

4. Using the Calculator

Tips: Enter both short-term and long-term debt amounts in dollars. The calculator will sum them to provide the total debt figure.

5. Frequently Asked Questions (FAQ)

Q1: What's considered short-term vs long-term debt?
A: Short-term debt is due within 12 months, while long-term debt has maturities beyond one year.

Q2: Should I include accounts payable in short-term debt?
A: Yes, accounts payable are typically included as they represent obligations due within one year.

Q3: How is total debt different from total liabilities?
A: Total liabilities include all financial obligations, while total debt specifically refers to borrowed money.

Q4: Why is debt calculation important for businesses?
A: It helps assess financial leverage, risk, and ability to meet obligations, which affects credit ratings and investment decisions.

Q5: How often should debt be calculated?
A: For businesses, it should be calculated at least quarterly. Individuals should review their total debt annually or when making major financial decisions.