Over the past two years, Green Caterpillar Garden Supplies Inc. has relied more on the use of short-term debt than on long-term debt financing. This statement is , because: a. Green Caterpillar’s total current liabilities increased by $547 million, while its use of long-term debt increased by $1,640 million.
b. Green Caterpillar’s total current liabilities decreased by $547 million, while its long-term debt account decreased by $1,640 million.
c. Green Caterpillar’s total notes payable increased by $137 million, while its common stock account increased by $4,265 million.

c. Green Caterpillar’s total notes payable increased by $137 million, while its common stock account increased by $4,265 million.

Explanation:

Short term debt is he amount of the outstanding debt of an entity that will mature within 12 months. Short term debt is also known as current liability and its examples include note payable with one year, accounts payable, wages payable, etc.

Long term debts refers to the amount of the outstanding debt of an entity that will mature after 12 months. Long term debt is also known as non-current liability and its examples include note bank loan, debneture, lease obligation etc.

Therefore, the correct option in the question is option c. Green Caterpillar’s total notes payable increased by $137 million, while its common stock account increased by $4,265 million.

The reason is that total notes payable of $137 million is an example of short term debt financing, while common stock is not a debt financing but an equity financing.

Equity financing a financing that involves selin stock of a company to investors.

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