A retailer can grow quickly and be profitable on its income statement but still face financial problems due to an inadequate cash flow.

Question

Quizplus · Accepted Answer

A retailer's income statement may show growth and profitability, but if the cash flow is inadequate, the retailer may struggle to meet its financial obligations such as paying bills, salaries, and suppliers, which can lead to financial problems. Cash flow issues can arise from a variety of factors, including slow sales, high inventory, or extended payment terms from suppliers. Therefore, a retailer must monitor both its income statement and cash flow statement to ensure its financial health.

A Retailer Can Grow Quickly and Be Profitable on Its