Short term liabilities

Short-term Liabilities

Another term for current liabilities, representing obligations expected to be paid within one year or one operating cycle, including accounts payable, short-term loans, and accrued expenses.

For instance, a service company’s short-term liabilities might include $150,000 in accounts payable, $75,000 in short-term notes, $45,000 in accrued wages, and $30,000 in unearned revenue.

Short-term liabilities require careful management to ensure sufficient liquidity for timely payment while efficiently using working capital. They figure prominently in liquidity analysis through ratios like the current ratio (current assets divided by current liabilities) and quick ratio, helping assess a company’s ability to meet near-term obligations without disrupting operations.