Current Liabilities are a company's short-term financial obligations that are due within one year or within a normal operating cycle. An operating cycle, also referred to as the cash conversion cycle, is the time it takes a company to purchase inventory and convert it to cash from sales. An example of a current liability is money owed to suppliers in the form of accounts payable.If a company has insufficient savings to pay these obligations when they become due, then it becomes liable for some form of debt. A company's long-term liabilities are obligations that are due more than one year after their initial recognition. Examples of these types of liabilities include bonds, mortgages and lease agreements.The difference between current and long-term liabilities is that the latter is not due for payment until after one year. A company's operating cycle can be measured in days, weeks or months depending on the type of company and its industry.For example, retailers often have very short operating cycles because they must pay suppliers within 30 days or less of receiving inventory in order to avoid penalties.
