Current Liabilities

Explanation: Current Liabilities are obligations or debts that a company is expected to settle within one year or within its normal operating cycle, whichever is longer. These liabilities are typically short-term in nature which are due within the next 12 months.

In addition to the total current liabilities figure, it’s important to understand the components that make up this category.

Trade payables, also known as accounts payable, represent amounts owed to suppliers and vendors for goods and services purchased on credit.

Short-term borrowings include loans and other forms of financing that are due within one year. These borrowings provide companies with short-term capital to fund operations or meet immediate financial needs.

Other current liabilities encompass a variety of short-term obligations beyond trade payables and short-term borrowings, such as accrued expenses, taxes payable, and deferred revenue.

Short-term provisions refer to amounts set aside by a company to cover expected future expenses or liabilities, such as warranties, legal claims, or restructuring costs.

Understanding the composition of current liabilities provides insight into a company’s short-term financial obligations and its ability to manage liquidity effectively.

Example: TCS has current liabilities of 43,558 crore as of FY23. This figure represents the total amount of money that TCS owes to creditors and suppliers that needs to be paid off within the next year. Current liabilities are important because they reflect the company’s short-term financial obligations and its ability to meet its near-term financial commitments. Monitoring changes in current liabilities over time helps assess the company’s liquidity, working capital management, and financial stability.

You can view the value of Current Liabilities for any company on Radar under the Current Assets in the Balance Sheet section.