Total liabilities

What is Total liabilities

Total liabilities refers to the total amount of debts and obligations that a company owns. Total liabilities are reported on the company balance sheet and can be categorised as: short-term loans, bonds payable, accounts payable, mortgage payable, capital leases Interest payable, bills payable, income taxes payable etc.

Liabilities are obligation between the company and another party that has not yet been completed or paid for.

How to calculate Total liabilities (formula)

Total liabilities are balance sheet entries and are calculated as sum of all the liabilities on the balance sheet. Liabilities are usually categorised in two groups:

• Current liabilities - also known as short-term liabilities are liabilities that are due and expected to be payed in the next year. There are things like short term loans, bills payables and accounts payable.
• Non-Current liabilities - also known as long-term liabilities are all the other liabilities that are not due in the next year.

Total liabilities can be calculated as sum of the current and not current liabilities:

Or they can be calculated as the difference between the total assets an the shareholders equity:

Liabilities are important part of company structure are used to finance operation and invest in growth. They also make the business transactions more robust allowing for payments to be done on a more flexible schedule.