Me & My Money Series (Sunday Times)

[Musicwhiz]

Yes! For that matter not many people know a profitable company (though not common) can stop operation(bankrupted) at the end of the day due to cash-flow. Don't believe?

This is indeed very true. Cash flow is the lifeblood of any business and profitability is simply an accounting concept. For a normal business, operations depend greatly on availability of cash to finance purchase of inventories and payment of rent/salaries. This is why observing the working capital cycle of any business is so important. If cash conversion is poor and the business is heavily reliant on external financing (i.e. debt from banks), there is a high risk of collapse should demand for products and services collapse.