Liabilities

Liabilities are financial obligations or debts a company or individual owes to others. They represent asset claims arising from borrowing, purchasing goods or services on credit, or other transactions. Liabilities are categorized as current, due within a year (e.g., accounts payable, short-term loans), or non-current, due after a year (e.g., long-term debt, mortgage). They play a crucial role in financial analysis, indicating an individual’s financial health and leverage. Proper management of liabilities is essential to ensure solvency and the ability to meet financial commitments.