Answer (C) is correct . A firm is insolvent when its debts exceed its assets (stock-based insolvency) or when its cash flows are inadequate to meet maturing obligations (flow-based insolvency).
Answer (A) is incorrect because A low cash balance does not, by itself, indicate insolvency.
Answer (B) is incorrect because Lack of liquidity does not, by itself, indicate insolvency.
Answer (D) is incorrect because A lack of borrowing capacity does not, by itself, indicate insolvency.
|
