It is important for companies to know what they are owing others and short-term liabilities can be a useful running indicator of how debts change over time. Usually presented as a balance sheet item, short-term liabilities is the sum of all money a company owes and due within five years or less. Accounts payable, accrued liabilities and other debts which may be interest-free are added up to calculate short-term liabilities.
For example…
Landscape material and plants nursery business owner Lisa has just calculated her short-term liabilities and this list include items like the down payments on her trailer and other vehicles to help transport stock. She also has the loan repayments for the ten thousand dollar business loan she took out and liabilities like the credit card debt on her business accounts. All in all, her short-term liabilities add up to sixteen thousand dollars.
