Editing Current liability (section)

{{Short description|Liabilities of the business that are to be settled in cash}}
{{Accounting}}
'''Current liabilities''' in [[accounting]] refer to the [[Liability (financial accounting)|liabilities]] of a business that are expected to be settled in [[cash]] within one [[fiscal year]] or the firm's [[operating cycle]], whichever is longer.<ref name=":0">Drake, P. P., ''Financial ratio analysis'', p. 3, published on 15 December 2012.</ref> These liabilities are typically settled using [[current asset]]s or by incurring new current liabilities.<ref name=":2">{{Cite book |last1=Kieso |first1=Donald E. |url=https://books.google.com/books?id=331G-mCZeeIC&dq=current+liabilities&pg=PA201 |title=Intermediate Accounting: IFRS Edition |last2=Weygandt |first2=Jerry J. |last3=Warfield |first3=Terry D. |date=2010-06-01 |publisher=John Wiley & Sons |isbn=978-0-470-61630-7 |language=en}}</ref>{{Rp|page=201}}

Key examples of current liabilities include [[accounts payable]], which are generally due within 30 to 60 days, though in some cases payments may be delayed. Current liabilities also include the portion of long-term [[loan]]s or other debt obligations that are due within the current fiscal year.<ref name=":0" /> The proper classification of liabilities is essential for providing accurate financial information to investors and stakeholders.

The classification of liabilities also plays a role in determining financial ratios, such as the [[current ratio]]—calculated as current assets divided by current liabilities. A higher current ratio indicates that the business has sufficient current assets to cover its obligations over the coming year, suggesting stronger liquidity.<ref name=":0" /> The difference between current assets and current liabilities is referred to as [[trade working capital]].<ref name=":2" />{{Rp|page=202}}