In general,the greater a firm's reliance upon short-term debt or current liabilities,
A) the lower will be its liquidity.
B) the greater will be its liquidity.
C) liquidity will remain constant.
D) there will be no effect on liquidity.

Question

Quizplus · Accepted Answer

Short-term debt or current liabilities represent obligations that must be paid off within a year. If a firm relies heavily on these types of debt, it may struggle to meet its obligations if cash flows become restricted. This could result in a lower liquidity position for the company as it faces difficulty fulfilling its short-term obligations.

In General,the Greater a Firm's Reliance Upon Short-Term Debt or Current