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Can an entity classify its debt or liability as a long term liability regardless of its maturity time?

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Question added by Adeel Akhtar , Accounting/Finance Manager , Popular Homes
Date Posted: 2016/07/27
Shamik Sinha
by Shamik Sinha , SENIOR MANAGER AUDIT , M/S MADHUSUDHANA REDDY & CO, Chartered Accountants

It will affect the various Ratios in Financial Analysis. For example, if you classify an item which is actually a short term liability as a long term liability, the Current Ratio will be higher.

Amr Ibrahim
by Amr Ibrahim , Equity Research Analyst , Mubasher International

NO, THE shorter maturity should be classified as short term and the current portion of the debt should be classified as short, the equity is always long term

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