(e) Current Liabilities:
Given below is a sample balance sheet:
(e) Current Liabilities:
These are liabilities or payments, which have to be made within a year. Salaries, Utility payments, Trade payables, working capital loans, short-term debt raised through the issue of commercial papers, unclaimed dividends, maturing long term debt and others are typical examples of current liabilities. Current liabilities are analysed to determine the efficiency with which the working capital is managed. For example, the Trade payables days calculated as trade payables/Cost of sales x 365 days, is the time taken to pay the suppliers. A high number indicates that the company is in a strong position and is able to get credit from its suppliers without tying up its cash. But very high trade payable days should be investigated to see if the company is facing a fund crunch or even insolvency.
In the above example, Current Liabilities stand at Rs. 22.
