What are current liabilities?

Current liabilities refer to financial obligations that a company is expected to settle within one year or within its operating cycle, whichever is longer. This definition is crucial in the context of financial reporting and liquidity management, as it helps stakeholders understand the short-term financial health of a company.

Examples of current liabilities include accounts payable, short-term loans, accrued expenses, and other similar obligations. These liabilities are essential for assessing a company's ability to meet its short-term obligations, which directly impacts its liquidity and operational efficiency.

The other choices do not accurately describe current liabilities. Obligations that extend beyond one year are classified as long-term liabilities, while assets that can be turned into cash within a year are termed current assets. Equity investments pertain to ownership interests in the business, which does not fall under liabilities at all. Thus, the correct characterization of current liabilities is their settlement expectancy within a year.