What happens if a company is unable to pay its current liabilities?

A It is forced to liquidate its assets. Correct Incorrect

B It is able to renegotiate its debts with lenders. Correct Incorrect

C It is able to defer its payments to a later date. Correct Incorrect

D It is able to borrow more money to pay off its debts. Correct Incorrect

Detailed Solution

Current liabilities refer to the debts and obligations that a company is expected to pay within one year or its operating cycle, whichever is longer. These are debts that are due in the short term and must be paid off quickly to avoid default.

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What happens if a company is unable to pay its current liabilities?

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