Cash shortages during the rapid-growth stage frequently derive from the lack of operating profits to fund working capital and fixed asset investments needed to support sales growth.

Question

Quizplus · Accepted Answer

During the rapid-growth stage, companies often experience a strain on their cash resources due to the need for investing in working capital and fixed assets to support sales growth. This can lead to a lack of operating profits available to fund these investments, causing cash shortages.

Cash Shortages During the Rapid-Growth Stage Frequently Derive from the Lack