Rapidly growing companies often buy increasing amounts of merchandise from suppliers on credit, and then sell the goods to their customers on credit. These companies sometimes have difficulty repaying their suppliers when customers who buy on credit don't pay on time. Firms that experience this difficulty need to do a better job of

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These firms are generating lots of revenue. Revenues that are tied up in credit sales are not the same as cash. Firms need cash to pay their bills. This shows that even companies that enjoy increased sales and higher profits can suffer greatly from cash flow problems.

Rapidly Growing Companies Often Buy Increasing Amounts of Merchandise from Suppliers