Current Liabilities
Financial obligations due within one year, shown on the balance sheet below current assets.
What is Current Liabilities?
Current liabilities are a company's financial obligations expected to be settled within one year or within the normal operating cycle. They are listed on the balance sheet below current assets and typically include accounts payable, accrued expenses, short-term borrowings, deferred revenue, income taxes payable, and the current portion of long-term debt. Current liabilities are central to liquidity analysis: the current ratio divides current assets by current liabilities to measure a company's ability to meet its short-term obligations. A ratio below 1.0 indicates that current liabilities exceed current assets, which may signal liquidity risk.
Example
Microsoft's balance sheet as of June 2024 reported current liabilities of approximately $125 billion, including $22 billion in accounts payable, $34 billion in short-term debt, and $31 billion in deferred revenue from subscription services. Against current assets of $159 billion, Microsoft's current ratio was approximately 1.27, indicating a comfortable liquidity position.