In the context of operational working capital, what are considered current liabilities?

• A. All long-term debts
• B. Only those debts that are secured
• C. Short-term financial obligations due within a year
• D. Fixed operational expenses

Answer: (C)

Current liabilities refer to short-term financial obligations that a company is required to settle within a year. This includes items such as accounts payable, short-term loans, and other debts that are expected to be paid off in the near future. Recognizing current liabilities is essential for assessing a company's liquidity and operational efficiency, as these obligations impact the company’s working capital management.

The correct answer highlights the definition of current liabilities accurately. Understanding this concept is important for evaluating a company’s short-term financial health and its ability to manage cash flow effectively. It is also integral to financial analysis, as current liabilities influence essential financial ratios and working capital calculations.