As the current liabilities of the company increase, the current ratio will decrease. If the borrowed funds are short-term, the company will need to obtain new financing more often as the old source of financing matures. This will require more frequent repayments of the principal which increases the chance that the funds will not be available in the short-term or that new financing will not be able to be found. Leverage measures the use of borrowed money. It does not matter if those borrowings are short-term or long-term. The period of time for which the borrowed funds are outstanding does not impact the amount of idle assets that the company has.
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