Let us say that long-term debt has an interest rate and
short-term debt does not. Then...
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Finance
Let us say that long-term debt has an interest rate andshort-term debt does not. Then why not finance your entireoperation with non interest bearing short-term payables? Could saveyou money! What does the current ratio really measure and should itvary depending on the certainty of sales revenue? Note: textbooksprobably get this wrong in my opinion.
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Financing entire operation with non interest bearing shortterm payables is not a feasible option Although there is no interest to be paid there is the obligation of repaying the debt every few daysweeksmonths This would seriously hamper the
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