It is possible for a profitable company to go out of business because of severe short-term liquidity problems.

Name: It is possible for a profitable company to go out of business because of severe short-term liquidity problems.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Even if a company is profitable, if it faces severe short-term liquidity problems, it may not have access to enough cash flow to cover immediate expenses, leading to default on loans, inability to pay suppliers or employees, and eventually bankruptcy.

It Is Possible for a Profitable Company to Go Out