Spontaneous Liabilities

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DEFINITION

Liabilities of a company that are accumulated automatically as a result of the firm's day-to-day business. Spontaneous liabilities can be tied to changes in sales - such as the cost of goods sold and accounts payable. These liabilities can also be "fixed," as seen with regular payments on long-term debt.

INVESTOPEDIA EXPLAINS

The projected growth in spontaneous liabilities is an important component for firms to consider as they evaluate the need to borrow additional funds. Spontaneous assets and liabilities typically move with changes in sales. Spontaneous asset accounts include accounts receivable and inventories.


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