Which of the following best characterizes the differences between operating and

Question

Which of the following best characterizes the differences between operating and financing liabilities?

A. Operating liabilities are the result of prior financing cash inflows.

B. Financing liabilities arise from the normal course of business activities and represent the operating capital for a given level of production and sales.

C. Operating liabilities are reported at the expected (undiscounted) cash flow.

D. A shift from financing liabilities to operating liabilities may signal the beginning of a liquidity crisis

Explanation / Answer

Which of the following best characterizes the differences between operating and financing liabilities

So answer is d)  A shift from financing liabilities to operating liabilities may signal the beginning of a liquidity crisis

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