Current Liabilities Management Issues

Liabilities represent present legal obligations for future payment of assets or future performance of service. They result from past transactions and should be recognized when there is a transaction that obligates the company to make future payments. Liabilities are valued at the amount of money necessary to satisfy the obligation or the fair value of goods or services that must be delivered. Liabilities are classified as current or long term. Supplemental disclosure is required when the nature or details of the obligations would help in understanding the liability. Liabilities are an important consideration in assessing a company’s liquidity. Key measure are working capital, payables turnover, and average days’ payable.