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A business can make profit yet lack money to pay debts

Last week, I mentioned in closing that “… cash is king. A profitable business without cash will close down but a loss-maker awash with cash will continue operating.”

This remark has disturbed a number of readers and they have asked whether it is realistic to expect a profit-making business to have a shortage of cash.

Well, the answer is not only yes, but also that this is a very common state of affairs. Indeed, quite often when a business fails, we hear the senior managers talking about “cash flow challenges”. They never say that they a…
Business News

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