Explanation of Short Term Debt:

Short Term Debt is listed on the Balance Sheet, and is often the debt the company has accumulated that is due in less than a year and that have interest applied to the debt. Short Term debt often carries the highest interest rates of all a company's debt. Bank loans, notes commercial paper, and short term lines of credit are all examples of Short Term Debt.

Importance of Short Term Debt:

Short Term Debt can be useful to a company to leverage its operations a little further, however companies relying too much on this can quickly get overwhelmed with debt, crippling its operations as it has to spend its earnings on debt and interest repayment instead of improving the company.