Search Investopedia

Current Liabilities

Filed Under »
Dictionary Says

Definition of 'Current Liabilities'

A company's debts or obligations that are due within one year. Current liabilities appear on the company's balance sheet and include short term debt, accounts payable, accrued liabilities and other debts.
Investopedia Says

Investopedia explains 'Current Liabilities'

Essentially, these are bills that are due to creditors and suppliers within a short period of time. Normally, companies withdraw or cash current assets in order to pay their current liabilities.

Analysts and creditors will often use the current ratio, (which divides current assets by liabilities), or the quick ratio, (which divides current assets minus inventories by current liabilities), to determine whether a company has the ability to pay off its current liabilities.

Related Definitions

  •

    Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable entry is found on a balance sheet under the heading current ...
    Read More »

  • Short-Term Debt

    An account shown in the current liabilities portion of a company's balance sheet. This account is comprised of any debt incurred by a company that is due within one year. The debt in ...
    Read More »

  • Current Assets

    1. A balance sheet account that represents the value of all assets that are reasonably expected to be converted into cash within one year in the normal course of business. Current assets ...
    Read More »

    • 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 ...
      Read More »

    • Other Current Liabilities

      A balance sheet entry used by companies to group together current liabilities that are not assigned to common liabilities such as debt obligations or accounts payable.
      Read More »

    • Current Ratio

      A liquidity ratio that measures a company's ability to pay short-term obligations. The Current Ratio formula is: Also known as "liquidity ratio", "cash asset ratio" and "cash ratio".
      Read More »

    • Quick Ratio

      An indicator of a company's short-term liquidity. The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. The higher the quick ratio, ...
      Read More »

    • Accounts Receivable - AR

      Money owed by customers (individuals or corporations) to another entity in exchange for goods or services that have been delivered or used, but not yet paid for. Receivables usually come ...
      Read More »

    • Acid-Test Ratio

      A stringent indicator that determines whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory. The acid-test ratio is far more strenuous ...
      Read More »

    • Working Capital Turnover

      A measurement comparing the depletion of working capital to the generation of sales over a given period. This provides some useful information as to how effectively a company is using ...
      Read More »

Articles Of Interest

Sponsored links
Hot Definitions
Partner Links
Suggested Definitions