The ability to refinance short-term obligations on a long-term basis can be demonstrated if the company has already refinanced those obligations after the date of the balance sheet but before it is issued.

Question

Quizplus · Accepted Answer

This is because the refinancing of short-term obligations to long-term after the balance sheet date but before the issuance of the financial statements provides evidence of the company's ability to manage its debt and liquidity, allowing for the reclassification of the obligation as long-term in the financial statements.

The Ability to Refinance Short-Term Obligations on a Long-Term Basis