Question

29. Which asset-liability combination would most likely result in the firm's having the greatest risk of
technical insolvency,
(A) Reducing current assets, increasing current liabilities, and reducing long-term debt.
(B) Replacing short-term debt with equity.
(C) Increasing current assets while incurring more current liabilities.
(D) Increasing current assets while lowering current liabilities.

Answer 1

Answer:

Which asset-liability combination would most likely result in the firm's having the greatest risk of technical insolvency? Increasing current assets while lowering current liabilities.