2 min read
Definition
Current liabilities are short-term obligations on the balance sheet: trade creditors, the current portion of loans, overdrafts, and tax or VAT owed. They are what your current assets need to cover.
In plain terms
They are the bills coming due soon. If they outweigh your current assets, you have negative working capital and may face a cash squeeze.
Why it matters for your company
Keeping current liabilities in balance with current assets is the essence of solvency. See working capital explained.
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