When a company has current debt that can be reclassified as long-term, it should do so because ________.
A) the debt will no longer require the use of current assets or the creation of another current liability
B) short-term debt improves the financial position of the company
C) it improves the credit rating of the company
D) it is a more conservative approach to the balance sheet

Question

Quizplus · Accepted Answer

Reclassifying current debt as long-term means it won't require immediate use of current assets or creation of another current liability, improving liquidity ratios.

When a Company Has Current Debt That Can Be Reclassified