If a Company's Financial Position Is Characterized by Current Liabilities

question 45

Multiple Choice

If a company's financial position is characterized by current liabilities greater than current assets,it is

• A) bankrupt.
• B) illiquid.
• C) insolvent.
• D) liquidated.

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Definitions:

Gain on Sale

The profit realized when an asset is sold for a price higher than its book value.

Indirect Method

A cash flow statement methodology that adjusts net income for changes in non-cash transactions and working capital to calculate cash flow from operating activities.

Net Cash Flow

The difference between a company's cash inflows and outflows within a given period.

Operating Activities

These activities involve the primary, day-to-day operations of a business, such as selling products, providing services, and incurring operating costs.