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Finance & Banking vocabulary · Financial Statements

Liability

Meaning in finance & banking, with examples

/ˌlaɪəˈbɪləti/nounCore term

In finance & banking, liability means: Money or another obligation that a company owes to others, such as loans, unpaid bills or, for a bank, its customers' deposits.

In Turkish: yükümlülük, borç, pasif

How it is used

Used in accounting and balance sheet analysis, usually in the plural. Liabilities are current (due within a year) or non-current. In law and insurance, 'liability' also means legal responsibility, as in 'limited liability company'.

Example sentences

  1. Customer deposits are the largest liability on our balance sheet.

  2. The firm's short-term liabilities are higher than its cash.

Common collocations

  • current liabilities
  • total liabilities
  • contingent liability
  • assets and liabilities
  • assetSomething of value that a person or company owns or controls, such as cash, buildings, receivables or investments.
  • equityThe owners' share of a company: what is left when liabilities are taken away from assets. It includes paid-in capital and retained profits.
  • balance sheetA financial statement showing what a company owns (assets), what it owes (liabilities) and the owners' share (equity) on a specific date.
  • depositMoney that you put into a bank account, or the act of putting it there. For a bank, customer deposits are its main source of funding.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Financial Statements

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This page explains English vocabulary for learners. It is not financial advice.