Total Current Liabilities is the total amount of liabilities that the company needs to pay over the next 12 months.
Total Current Liabilities = Account Payable + Current Portion of Long-Term Debt + Other Current Liabilities
The increase of Total Current Liabilities of a company is not necessarily a bad thing. This may conserve the companys cash and contribute positively to cash flow.
Total Current Liabilities is linked to Total Current Assets through Working Capital and the Current Ratio. The Current Ratio is equal to dividing total current assets by total current liabilities. It is frequently used as an indicator of a company's liquidity, its ability to meet short-term obligations.
Total Current Liabilities is also linked to Working Capital, Net working capital is calculated as Total Current Assets minus Total Current Liabilities.
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