What are liabilities?
Liabilities are a company’s financial obligations to outside parties — amounts owed to suppliers, lenders, employees, tax authorities and customers. Liabilities are recorded on the right side of the balance sheet, categorised as current (due within one year) or long-term.
Liability management — covenant compliance, refinancing, working-capital optimisation — is a core finance function. Total liabilities relative to equity (debt-to-equity ratio) and to assets (debt ratio) are standard leverage and solvency metrics.