Current Liability
What does it mean
A balance sheet lists all of the items owned by the business (Assets) as well as the debts that it owes (Liabilities). The listing of Liabilities is split between Current Liabilities and Noncurrent Liabilities. The difference between the two depends on the timing of when the debt is required to be paid. Liabilities that are required to be paid within the next 12 months are grouped into the Current Liabilities section. Examples of common Current Liabilities would be Accounts Payable or a Line of Credit.
Why does it matter
The reason why Current Liabilities matter is because the primary reason a business goes out of business is not due to profitability (take a look at all of the unprofitable tech companies on the stock exchange :), but because they run out of cash. Once the business runs out of cash, the game is over. Current liabilities represent the bills that need to be paid soon; so they will have an immediate impact on a borrower's cash.
Other Relevant Terms
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Greetings! I'm Clay Sharkey, and there is nothing I like more than assisting others in achieving their goals. I firmly believe that by enhancing a banker's understanding of their customer's' business, they can provide superior service. This superior service, in turn, leads to stronger relationships for the bank, improved performance for the businesses, and better experiences for our communities. Win-win-win.
