A firm that has positive profits can still be running out of cash.

Question

Quizplus · Accepted Answer

Positive profits indicate that the firm is earning more revenue than it is spending on expenses, but it does not necessarily mean that it has sufficient cash to cover its day-to-day operational expenses or financial obligations. Cash flow is a crucial aspect of a firm's financial health, and a negative cash flow situation can lead to insolvency, bankruptcy or other financial distress.

A Firm That Has Positive Profits Can Still Be Running