Total Liabilities is an accounting and finance term and refers to the total amount of debts and obligations owed by a company to its creditors and other stakeholders.
Includes both current liabilities, which are debts and obligations that are due within a year or less, and long-term liabilities, which are debts and obligations that are due more than a year in the future.
Total liabilities are an important metric for evaluating a company's financial health and solvency, as it represents the company's total debt obligations and how much it owes to others. Investors and creditors use total liabilities to assess a company's ability to meet its debt obligations, and to determine the company's leverage or debt-to-equity ratio, which can impact its creditworthiness and financial stability.
Let’s say a company has current liabilities of $1,000,000 and long-term liabilities of $2,000,000. The total liabilities of the company would be $3,000,000 ($1,000,000 + $2,000,000) or company has total assets of $4,000,000 and shareholders equity of $1,000,000. The total liabilities of the company would be $3,000,000 ($4,000,000 - $1,000,000).