Which of the following is the type of financial distress in which a firm's operating cash flows are not sufficient to pay its liabilities as they come due?

Question

Quizplus · Accepted Answer

Technical insolvency refers to a situation where a company's liabilities exceed its assets, but it is still able to pay its debts by using its current cash flow. However, when a company's operating cash flow is not sufficient to pay its liabilities as they come due, it is experiencing cash flow insolvency or illiquidity, which can lead to business failure or economic failure. Therefore, options A and B are incorrect, and option D is unrelated to financial distress.

Which of the Following Is the Type of Financial Distress