Are liabilities always a bad thing?

Liabilities are requirements which are frequently described as a demand on assets. Yet, liabilities and stockholders’ equity are the sources of resources of assets. In general, liabilities are considered to have less cost than stockholders’ equity. On the other hand, so many liabilities ensue in additional risk.

Some of liabilities have low interest rates whereas some have no interest at all connected to them. For instance, some of a company’s accounts payable may allow payment in thirty days that with those payables it is better to have the liability and to keep your cash at the bank until they become due.

When we look to our personal lives, it is undeniable fact that out first house was likely to be purchased with a down payment and mortgage payable. That mortgage payable was a big liability but it was the thing that let us upgrade our living space. I viewed my mortgage payable as a good thing because it let me own a nice home in a nice neighborhood.

In a nutshell, some liabilities are good; especially those low interests rated ones whereas too many of them could cause financial hardships.