Debt repayment period is a term that refers to the number of years, during which the enterprise will be able to repay all debts assuming that it will retain the current level of cash flow. The indicator is the inverse of the Cash Flow Solvency.
Debt repayment period = Liabilities / Operating CF
The indicator belongs to indicators based on cash flow.
Use of the indicator in practice: In the enterprise it is used by CFO in financial analysis to analyze ratios. Indicators based on cash flow try to catch warning signs of potential credit problems and assess internal financial potential of the company.
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