The Government of Canada has announced its intention to merge BDC and EDC. Today, BDC remains BDC, and we remain fully committed to Canadian entrepreneurs. Learn more

The Government of Canada has announced its intention to merge BDC and EDC. Today, BDC remains BDC, and we remain fully committed to Canadian entrepreneurs. Learn more

Definition

Current liabilities (short-term liabilities)

Current liabilities are debts a business must pay within a year.

Current liabilities (also called short-term liabilities) are debts a company must pay within a normal operating cycle, usually less than 12 months (as opposed to long-term liabilities, which are payable beyond 12 months).

Paying off current liabilities is mandatory. To do so, a company must carefully manage the relationship between current liabilities and current assets. The difference between them is referred to as working capital. It is one of six calculations a company looks at to assess how liquid its assets are.

Current liabilities appear along with long-term liabilities on the balance sheet. Together, these represent everything the company owes.

More about current liabilities

The balance sheet below shows ABC Co. had $70,000 in current liabilities as of March 31, 2012. The company has $120,000 in current assets available to cover its current liabilities; this is a healthy working capital balance.

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