What term refers to the debts that a business owes?

The term that refers to the debts that a business owes is liabilities. Liabilities encompass all financial obligations that a company must settle in the future, such as loans, accounts payable, and other forms of debt. They are a crucial aspect of a company's balance sheet and are important for understanding its financial health. By categorizing financial responsibilities as liabilities, stakeholders can assess the business's solvency and overall risk exposure.

In contrast, assets represent what a business owns, equities refer to the ownership interest in the company as represented by the shareholders' equity, and investments are typically resources obtained with the expectation of generating income or appreciating in value. Understanding these distinctions is vital for effective financial analysis and management within a business context.