Our Gang Transfer Company has shown consistent profits over the past five years.However,the company has recently found itself in financial trouble due to cash shortages.This indicates that:

Question

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The fact that the company has consistent profits but is experiencing cash shortages indicates that an accounting profit (profit calculated using accounting principles) does not always guarantee a positive cash flow. This could be due to factors such as slow-paying customers or inefficient use of cash. It is important for companies to not only focus on accounting profits but also on managing their cash flow effectively.

Our Gang Transfer Company Has Shown Consistent Profits Over the Past