Start networking and exchanging professional insights

Register now or log in to join your professional community.

Follow

Can an entity classify its debt or liability as a long term liability regardless of its maturity time?

user-image
Question added by Adeel Akhtar , Accounting/Finance Manager , Popular Homes
Date Posted: 2016/07/27
Shamik Sinha
by Shamik Sinha , SENIOR MANAGER AUDIT , M/S MADHUSUDHANA REDDY & CO, Chartered Accountants

It will affect the various Ratios in Financial Analysis. For example, if you classify an item which is actually a short term liability as a long term liability, the Current Ratio will be higher.

Amr Ibrahim
by Amr Ibrahim , Equity Research Analyst , Mubasher International

NO, THE shorter maturity should be classified as short term and the current portion of the debt should be classified as short, the equity is always long term

More Questions Like This