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Definition: A financial obligation that a business is required to pay. These include bonds, notes, accounts payable, etc.
TeenAnalyst Advice: When a company owes somebody, it's called a liability. These liabilities are recorded on the balance sheet. Net worth is figured as assets - liabilities. Therefore, liabilities take away from net worth.
Liabilities aren't bad, though. Liabilities mean that the company could be growing. And if a company takes out an 8% loan to create a project that will earn them a 15% return on their investment, it's considered a good liability.
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