short answer Some companies go out of business due to lack of cash flow. Even if they may have a lot of assets and minimal debt, without cash these companies cannot continue to operate. So the question is, if a company's net worth and net income are both positive, under what circumstances might it go out of business because of lack of cash flow?
short answer Some companies go out of business due to lack of cash flow. Even if they may have a lot of assets and minimal debt, without cash these companies cannot continue to operate. So the question is, if a company's net worth and net income are both positive, under what circumstances might it go out of business because of lack of cash flow?
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter15: Statement Of Cash Flows
Section: Chapter Questions
Problem 4TIF
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Some companies go out of business due to lack of cash flow. Even if they may have a lot of assets and minimal debt, without cash these companies cannot continue to operate. So the question is, if a company's net worth and net income are both positive, under what circumstances might it go out of business because of lack of cash flow?
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