The same distinction applies to liabilities as current and non-current. A covenant breach may require a long-term loan to be reclassified as current, directly affecting working capital metrics.
Source: TMS 1
Related terms
Statement of financial positionThe statement showing an entity's assets, liabilities and equity at a specific date; also known as the balance sheet.Working capitalThe difference between current assets and current liabilities; in practice usually used as net working capital, consisting mainly of trade receivables, inventories and trade payables.Financial covenantsObligations in loan agreements requiring the borrower to maintain certain financial ratios (such as net debt/EBITDA or debt service coverage).Accounting estimatesThe determination by management judgement of amounts that cannot be measured precisely, such as provisions, useful lives, expected credit losses and fair values.Accounting policiesThe specific principles, bases, conventions, rules and practices an entity applies in preparing its financial statements.Accrual basis of accountingThe principle of recording transactions as income, expenses, assets and liabilities in the period in which they occur, rather than when cash is received or paid.
Last updated: November 8, 2026 · This definition is for general information only.