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Average Annual Current Maturities Definition
Basically, the current maturities of long-term debt tells the period of time that the bond has until its maturity date. Usually, it indicates the part of the long-term debt that will mature or come due in the next 12 months.
The Average Annual Current Maturities refers to the amount a company will pay on the long-term debt which will come due within the next 12 months. It is the liabilities of a company that have their maturity date in the next 12 months.
A Little more on What is Average Current Maturity
The long-term debts or liabilities of a company that are coming due within the next 12 months are called the average annual current maturities. It calculates the terms of the current year and divides it by the amount of debt or liabilities that a company has. It is an annual indicator of a company’s debt obligations.
The annual average maturity date reflects the current repayment date, the total time a company has before the debt repayment is completed. It can also be calculated as the average time left for a company to repay all its debt obligations, it reflects the average expiration date of the debt.
Example of Average Annual Current Maturities
Most companies have long-term debts or fixed liabilities such as bonds, mortgage loans, machinery and automobile loans and others. A portion of the long-term debt that is coming due within the next 12 months (one year) is the current maturity date. There are some parts of fixed liabilities that are required to be repaid within a year, these are called current liabilities.
When companies use compensated loans or refinance their debts, they are trying to reduce the current liabilities they will have for the year. Current liabilities are calculated for long-term debts that are scheduled to be repaid within a period of 12 months.
References for Average Annual Current Maturities
Academic Research for Average Annual Current Maturities
The maturity structure of corporate debt, Barclay, M. J., & Smith Jr, C. W. (1995). The Journal of Finance, 50(2), 609-631.
Corporate debt maturity and the real effects of the 2007 credit crisis, Almeida, H., Campello, M., Laranjeira, B., & Weisbenner, S. (2009). National Bureau of Economic Research.
Debt maturity structure and liquidity risk, Diamond, D. W. (1991). The Quarterly Journal of Economics, 106(3), 709-737.
An equilibrium characterization of the term structure, Vasicek, O. (1977). Journal of financial economics, 5(2), 177-188.
The debt burden and debt maturity, Missale, A., & Blanchard, O. J. (1991). National Bureau of Economic Research.
Managerial stock ownership and the maturity structure of corporate debt, Datta, S., Iskandar‐Datta, M., & Raman, K. (2005). the Journal of Finance, 60(5), 2333-2350.
Seniority and maturity of debt contracts, Diamond, D. W. (1993). Journal of financial Economics, 33(3), 341-368.
Optimal capital structure, endogenous bankruptcy, and the term structure of credit spreads, Leland, H. E., & Toft, K. B. (1996). The Journal of Finance, 51(3), 987-1019.
The determinants of debt maturity structure: evidence from France, Germany and the UK, Antoniou, A., Guney, Y., & Paudyal, K. (2006). European Financial Management, 12(2), 161-194.
Law, finance, and firm growth, Demirgüç-Kunt, A., & Maksimovic, V. (1998). The Journal of Finance, 53(6), 2107-2137.
Why are US firms using more short-term debt?, Custódio, C., Ferreira, M. A., & Laureano, L. (2013). Journal of Financial Economics, 108(1), 182-212.