What are Total Liabilities?
Total Liabilities are the responsibilities of a company. It includes debts to creditors and suppliers, as well as contracts, funds or services received in advance for future sales or future services that will be performed. Total Liabilities for commercial companies can be divided into Current Liabilities and Non-Current Liabilities.
Why are Total Liabilities important?
Liabilities are usually defined as obligations, which can lead to additional risk if a company has too many liabilities. While assets add value to your company and increase your company's equity, liabilities decrease your company's value and equity. The more your assets outweigh your liabilities, the stronger the financial health of your business.