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?

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter16: Statement Of Cash Flows
Section: Chapter Questions
Problem 3TP: Consider the dilemma you might someday face if you are the chief financial officer of a company that...
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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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