Hello,
Why aren’t current liabilities considered short term debt and vice-versa?
Thanks in advance.
Because current liabilities include both interest-bearing instruments and non-interest-bearing instruments.
Short-term debt is an interest-bearing liability, however, accounts payable (to suppliers) commonly does not bear any interest cost within expiration time.
Note that “debt” is usually seen as a duty to financial institutions like banks or third-party capital providers. Accounts payable, taxes payable, and other kind of payables are commonly not duties to financial institutions, so we separate them from “debt”.
In conclusion: current liabilities are commonly higher than short-term debt, so don’t use them as interchangeable definitions.
Hope this helps!
In short: debt bears interest.