What term refers to the debts that a company owes?

The term that refers to the debts that a company owes is liabilities. Liabilities are financial obligations or debts that arise during the course of business operations. They represent what a company is obligated to pay in the future, which can include loans, accounts payable, and any other owed amounts to creditors.

Understanding liabilities is crucial for assessing a company's financial health, as they indicate the risks and obligations that must be managed. In financial statements, liabilities are typically listed alongside assets and equity to provide a comprehensive view of the company's overall financial position. While assets represent what the company owns and equity represents the ownership interest in the company, liabilities specifically capture the company's debts and obligations. This distinction is important for investors and stakeholders when evaluating a company's solvency and operational efficiency.