What is the term for a person's financial obligations, including both long-term and short-term debt?

The term that refers to a person's financial obligations, which encompass both long-term and short-term debt, is liabilities. Liabilities are defined as the legal debts or obligations that arise during the course of business operations or personal finance. They can include mortgages, car loans, credit card debts, student loans, and any other obligations that represent money owed.

Understanding liabilities is crucial as they give a clear picture of an individual's or entity's financial health. By assessing total liabilities, one can determine how much debt a person carries in relation to their assets and income. This is essential for lenders evaluating potential borrowers, as it helps in assessing creditworthiness and the ability to repay debts.

In contrast, assets represent what a person owns, equity refers to the ownership value after liabilities are subtracted from assets, and net worth is the difference between total assets and total liabilities. Hence, while all of these terms are related to financial statements and personal finance, liabilities specifically pertains to the debts and obligations owed by an individual or entity.