What are current liabilities?

Current liabilities are debts or other obligations incurred by a company and falling due within 12 months. They are the balance-sheet counterpart of current assets.

Where have you heard about current liabilities?

Company balance sheets will list current liabilities in their balance sheets alongside current assets, thus investors will be able to set the one against the other and gauge the financial health of the business.

What you need to know about current liabilities.

Current liabilities comprise payments due on a time-scale from immediately to 12 months' time. Included in current liabilities are bills from suppliers, interest or capital payable on short-term loans, payments or maturity regarding longer-term debt, dividend payments to shareholders and deposits owed to customers.

Investors will use calculations such as the current ratio to divide assets by liabilities in order to judge the liquidity of the business the higher the ratio, the healthier the company's position, while a ratio below one would show that current liabilities were greater than current assets.

Find out more about current liabilities.

To learn more about current liabilities and what they can tell us about a company's financial health, see our definition of current assets.