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Is It Possible For A Company To Have Positive Cash Flow But Be In Serious Financial Trouble?

DiscussIs It Possible For A Company To Have Positive Cash Flow But Be In Serious Financial Trouble?
tara asked 22 years ago

Yes, it is. A company that is selling off inventory but delaying payables will show positive cash flow for a while even though they’re in trouble. Another example would be where a company has strong revenues for the period but future forecasts show that revenues will decline. This would happen when a company hasn’t focused on making sure there were new prospects/sales in the pipeline.