Non-Interest-Bearing Current Liability

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Non-Interest-Bearing Current Liability

Liabilities that a person or company must pay within a year that do not accrue interest. Examples of NIBCL include taxes that are due but do not have interest or penalties (that is, taxes due in the current year) and accounts payable where the creditor is not charging interest. Less commonly, an NIBCL may be an interest-free loan. Non-interest-bearing current liabilities are recorded on a balance sheet under current liabilities.
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The effect on the profit-on-sales ratio may be favorable if non-interest-bearing current liabilities (particularly trade credit) is substituted for long-term liabilities or may be unfavorable if the interest rate on short-term bank credit is higher than the long-term rate.
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