Maturity Mismatch


DEFINITION of 'Maturity Mismatch'

The tendency of a business to mismatch its balance sheet by possessing more short-term liabilities than short-term assets and having more assets than liabilities for medium- and long-term obligations. How a company organizes the maturity of its assets and liabilities can give details into the liquidity of its position.

BREAKING DOWN 'Maturity Mismatch'

Changes in a company's maturity profile can also be useful in learning more about the status of a company because it indicates a company's ability to borrow. Using the maturity mismatching structure of a company along with additional information can help investors to assess the company's liquidity position.

  1. Maturity

    The period of time for which a financial instrument remains outstanding. ...
  2. Liquidity

    The degree to which an asset or security can be quickly bought ...
  3. Current Assets

    A balance sheet account that represents the value of all assets ...
  4. Long-Dated Asset

    A class of income-generating assets where the revenue stream ...
  5. Current Liabilities

    A company's debts or obligations that are due within one year. ...
  6. Liability

    A company's legal debts or obligations that arise during the ...
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  1. Does working capital include inventory?

    A company's working capital includes inventory, and increases in inventory make working capital increase. Working capital ... Read Full Answer >>
  2. Does working capital include salaries?

    A company accrues unpaid salaries on its balance sheet as part of accounts payable, which is a current liability account, ... Read Full Answer >>
  3. Are dividends considered an asset?

    Whether dividends paid on stock are considered an asset depends on which role you play in the investment: the issuing company ... Read Full Answer >>
  4. What is a profit and loss (P&L) statement and why do companies publish them?

    A profit and loss (P&L) statement, or balance sheet, is essentially a snapshot of a company's financial activity for ... Read Full Answer >>
  5. How do dividends affect the balance sheet?

    Dividends paid in cash affect a company's balance sheet by decreasing the company's cash account on the asset side and decreasing ... Read Full Answer >>
  6. Who actually declares a dividend?

    It is a company's board of directors who actually declares a dividend. The declaration date is the first of four important ... Read Full Answer >>

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