Posted in Finance, Accounting and Economics Terms, Total Reads: 902
Definition: Current Liabilities
These are the present obligations of the firm which are to be settled within a year. These obligations are settled by current assets. The liabilities of balance sheet are basically divided into 2 types- Long term/Fixed Liabilities and Current Liabilities.
But even if a liability is long term initially it becomes a current liability when there’s less than year for repayment. The overall picture of current liabilities with current assets helps to analyze the financial health of the firm.
Current Liabilities include:
Short term notes payable
Other accrued expenses
Current maturities of long term debt etc.
Current Assets (-) Current Liabilities gives us the “NET WORKING CAPITAL” of the firm which essentially shows the liquidity position.