Spontaneous Liabilities


DEFINITION of 'Spontaneous Liabilities'

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.

BREAKING DOWN 'Spontaneous Liabilities'

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.

  1. Balance Sheet

    A financial statement that summarizes a company's assets, liabilities ...
  2. Spontaneous Assets

    The assets of a company that are accumulated automatically as ...
  3. Net Worth

    The amount by which assets exceed liabilities. Net worth is a ...
  4. Current Liabilities

    A company's debts or obligations that are due within one year. ...
  5. Liability

    A company's legal debts or obligations that arise during the ...
  6. Long-Term Liabilities

    In accounting, a section of the balance sheet that lists obligations ...
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    Working capital as current assets cannot be depreciated the way long-term, fixed assets are. In accounting, depreciation ... Read Full Answer >>
  2. Do working capital funds expire?

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  3. How much working capital does a small business need?

    The amount of working capital a small business needs to run smoothly depends largely on the type of business, its operating ... Read Full Answer >>
  4. What does high working capital say about a company's financial prospects?

    If a company has high working capital, it has more than enough liquid funds to meet its short-term obligations. Working capital, ... Read Full Answer >>
  5. How can working capital affect a company's finances?

    Working capital, or total current assets minus total current liabilities, can affect a company's longer-term investment effectiveness ... Read Full Answer >>
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