Q&A
Ask and answer questions to make information more available to wider audiences.
Nelson Burton
@burtonnelson 25, May 2023 12:00 AM
positive cash flow in serious financial trouble
Is it possible for a company to have a positive cash flow but still be in serious financial trouble?
answers 2
Answer 1
Hadley Minett
@minetthadley 31, May 2023 01:07 PM
It is possible for a company to reflect positive cash flows but be in huge financial trouble. While there are several ways to do so, two significant ones can be showing improvements in working capital (by selling inventory but delaying payables) and a lack of revenues in the pipeline. These can help a company save its public reputation in the hour of need.
Answer 2
Orion Bell
@bellorion71 31, May 2023 01:04 PM
Yes. There are two examples:
* A company that is selling off inventory but delaying payables will show positive cash flow for a while even though it is in trouble
* A company has strong revenues for the period, but future forecasts show that revenues will decline