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Miss Fizzdot,

Later in IETC you'll find a ratio called the debt repayment period. DRP is equal to a firm's total debt divided by its free cash flow. This is the period of time, in years, that a firm need to pay off its indebtedness. The longer the DRP, the more speculative the firm's capitalization. I avoid companies with DRP's over 5 years.

If you include the current portion of long-term debt as a working capital liability, then you are mixing operating and financing elements of the balance sheet. I prefer to keep them separate.

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