Current liabilities are obligations due within twelve months or within the normal operating cycle: trade payables, accrued expenses, short-term debt, deferred revenue, current tax liabilities and current portions of long-term debt. They are the counterpart of current assets in working capital calculation and are analysed in detail in financial due diligence. Key areas of focus include the completeness of accruals, the adequacy of provisions, off-balance sheet obligations included in current liabilities and the classification of financial debt between current and non-current (which affects the working capital calculation).

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Example: during due diligence on a Swiss services company, the analyst identifies CHF 340,000 of under-accrued payroll obligations and CHF 280,000 of deferred revenue improperly excluded from current liabilities. These restatements increase current liabilities by CHF 620,000, reducing normalised working capital accordingly and impacting the completion accounts price adjustment in favour of the buyer.

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Hectelion analyses current liabilities exhaustively to identify hidden obligations and ensure working capital is correctly normalised for transaction purposes.