If the Following Facts Were Known, Which One Would Strengthen

question 98

Short Answer

If the following facts were known, which one would strengthen the argument that a company would be able to meet its current financial obligations?
The level of accounts payable is high.
Liabilities exceed assets.
The company currently has a negative cash flow.
The company needs to increase the number of customers it serves.
Assets exceed liabilities.

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Definitions:

Liquidation

The third form of external administration prescribed by the Corporations Act. The process whereby a company is dissolved, at which point the company ceases to be a legal entity.

Liquidator

An external administrator appointed to dissolve the company.

Creditors

Individuals or entities that a company owes money to, typically as a result of receiving goods or services.

Dissolution

The process of legally dissolving a company, ending its existence by distributing its assets to creditors and shareholders.