Question

question 15
a negative value net liquid balance most likely indicates:
cash holdings are insufficient to repay long - term debt
cash holdings are insufficient to repay total current liabilities
cash holdings are insufficient to repay short - term financial liabilities
cash holdings are insufficient to repay spontaneously generated financing

Explanation:

To solve this, we analyze the concept of net liquid balance. Net liquid balance relates to short - term financial obligations.

• Option 1: Long - term debt is not related to net liquid balance (which is about short - term).
• Option 2: Total current liabilities include non - financial current liabilities too, while net liquid balance focuses on short - term financial liabilities.
• Option 3: Net liquid balance is calculated as cash (and near - cash) minus short - term financial liabilities. A negative net liquid balance means cash holdings are less than short - term financial liabilities, so cash is insufficient to repay short - term financial liabilities.
• Option 4: Spontaneously generated financing (like accounts payable) is not what net liquid balance is about (it's about short - term financial liabilities like short - term debt).

Answer:

C. Cash holdings are insufficient to repay short - term financial liabilities