Disadvantages of using current liabilities as opposed to long-term debt include

Question

Quizplus · Accepted Answer

Current liabilities typically have shorter payment periods and higher interest rates, increasing the risk of not being able to pay bills and uncertainty of interest costs. Long-term debt typically has lower interest rates and longer payment periods, reducing these risks. Therefore, using current liabilities as opposed to long-term debt carries higher cash flow exposure and risk.

Disadvantages of Using Current Liabilities as Opposed to Long-Term Debt