What are Liabilities?

Rajnikant is teaching us about Liability

If you watch this scene carefully from the movie Hum. You will understand the concept of liabilities.

Case breakdown: Movie Hum

There are 3 brothers in this particular scene. Tiger or Shekhar (played by Mr. Amitabh Bacchan) is the oldest brother while Kumar (Rajnikant, Middle brother, Inspector) and the youngest brother, Vijay played by Govinda.

Now Tiger was a small time gangster when he was younger, so while he was a gangster he took favors from some people and few people became his enemy. Soon, he realized he needs to clean up his act and provide for his family.

In Present, one of his enemy holds a grudge against him and decides to kidnap his sister-in law to prove a point. Kumar (Rajnikant) does not have a clue what’s happening, and he tells Tiger or Shekhar that his acts in the past have been a liability (something that is owed) which is causing the present circumstances. He is distraughted as his wife and daughter are kidnapped.

What are Liabilities?

Liabilities are company’s obligations that need to be repaid. Companies generally undertake long term financing through term loans, bonds, leases, notes etc. In simple words, if I have to run a business, I will take a loan from a bank which is payable in say, 5 years, hence long term. This long term financing can be done through various instruments such as bonds, notes etc and the company pays interest (Sood ke Saath) on the loan obtained.

As indicated in the scene above, Kumar (Played by Rajnikant) says to Tiger (Amitabh Bachhan) that because of his past bad deeds (paapon ka Karz/Loan) that was drawn on his name and now he is responsible for the the payment along with the interest (Sood ke Saath). [As his family is taken as a Collateral]

Banks generally ask for collateral from companies, if the company isn’t able to pay then banks will take ownership of the collateral (house, building, Jewelry etc) and will recover their money. It seems the enemy (Played by Danny) who has kidnapped the sister-in- law and niece is treating them like collateral. Companies obtain funds through either debt financing (Liabilities) and equity financing (stockholder’s equity).

 

Written by: Ms. Gitika Chandra

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