Current Liabilities
Obligations expected to be settled within one year, including accounts payable, short-term debt, and accrued expenses, crucial for assessing short-term liquidity.
Current Liabilities
Obligations expected to be settled within one year or one operating cycle, including accounts payable, short-term loans, current portion of long-term debt, and accrued expenses.
For example, a retail company’s current liabilities might include $200,000 in accounts payable, $50,000 in accrued payroll, $75,000 in current portion of long-term debt, and $30,000 in income taxes payable.
Current liabilities represent short-term financial obligations that typically require using current assets for payment. Their proper management is essential for maintaining adequate liquidity and working capital. Current liabilities form the denominator in liquidity ratios such as the current ratio and quick ratio, helping assess a company’s ability to meet short-term obligations.