Accruals are "free" capital in the sense that no explicit interest must normally be paid on accrued liabilities.

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Accrued liabilities are the expenses or obligations that a company has incurred but has not yet paid. They are considered free capital because no interest or other costs are associated with them until the company actually pays them off. However, if a company fails to pay its accrued liabilities on time, it may incur penalties or other costs, such as damage to its credit rating.

Accruals Are "Free" Capital in the Sense That No Explicit