Can a company show positive cash flows while facing financial problems?

like
Posting as :
works at
You are currently posting as works at

Of course - a company could be borrowing to have positive cash flow but still have negative net income.

likesmart

Exactly — their core operations are getting worse due to low sales to, for instance customers not interested or perhaps obsolescence. However, the firm can still have a strong balance sheet. For instance, they have great assets. Bank A will loan them x amount of fund because, at the end of the day they can pay it back.

Or, company is cyclical. For instance take a mining company, that does a lot of exploration. They might have cash due to equity investment or debt financing. They do not have any profit or better yet they, they have a loss.

Happy to walk you through more interesting scenarios

likefunny

Ever heard of a ponzi scheme?

like

Exactly – Network Marketing.

like

Of course, they could be borrowing money or selling off their assets.

like

Of course? Why do you ask...?

helpful

Kind of a red flag tho. Would have to look into how they have positive cf if in financial distress…is it from sustainable sources?

smart

Definitely. But a prime reason why cash flow can be misleading.

Others have mentioned it, but taking on debt is positive cash flow.

like

Exactly — one needs to analyze all 3 statements. That’s why financial modeling for all 3 statements is paramount for answering these questions. Grasping these contexts will not come easy unless one commits and is close to the business.

like

Yes, a company could be showing positive cash flow while foresaking medium and long term investments that would be needed to continue positive cash flow. i.e. - The house is super warm, but you've stopped chopping wood in favor of burning more. Works for now, but does not bode well for the future.

like

Great analogy here!
Thank you. 😊

like

There’s lots of reasons this could be happening. Some of them can actually mean the company is doing well and just not managing their assets correctly. I worked for one company that had strong growth and still had to declare bankruptcy. I was called in because they didn’t understand why that could happen.

uplifting

Let me give a few examples:
1. Heavy Capital Expenditures: the company I worked for was opening lots of retail stores. More than one a month. The cost of each store put strain on their financial resources, despite positive cash flow.
2. Poor mgt of Working Capital: they were growing so fast that they needed to buy more inventory, which got caught up between china and the US. If the companies cash is tied up in inventory still in transit, liquidity issues can make it difficult to meet other obligations, despite positive cash flows.
The solution was to bring in more investors with cash to help with growth.

Related Posts

Today I lost out on a house because my offer of $90k over the list price was beat out by another bid. Everyone else having an equally crappy Monday?

likefunny

What causes a coin to suddenly spike 100%+ in value in a matter of hours? I mean how does demand collectively sky rocket - seems unlikely that so many people would have a coordinated buy?

Thinking about investing in a 3-4 unit building in Chicago (Jefferson Park, Avondale, Bridgeport, etc.). Is the upcoming winter a good time to do so?

like

So I’m only contributing to 401k enough to get employer match, and I’m saving an additional ~20% and putting 90% of that into my vanguard mutual funds. Reasoning is that I don’t want to lock away all that money maxing out 401k. Have 3 months expenses liquid in a savings account. Is this really dumb? Essentially trading tax for the option of actually using my money.

like

Well, its a good thing I sold ARKF when it was $55 last year

like

All my investment is in real estate - 1 primary and 2 rental. Total 3.7 M value and 1.7 mortgage pending. About 400k in cash. I’ve 0 RRSP. Is my investment strategy terrible?

like

Have you ever taken a job you know you will hate because you needed the money right away? I have a family to take care of. I don't want to be plowing through our savings for selfish reasons like my mindframe at work, but I don't want to make our lives worse by being miserable. It's a matter of really ruining some of our financial future if we don't get money soon.

like

Let’s talk credit cards! Is there any one which has 0% foreign transaction fee? (Like Revolut)

like

Taking a gamble here. 25 OXY $16Cs for 4/9 and 25 OXY $17Cs for 4/9. $0.20 and $0.08 respectively. Very high risk but have gains on other OXY trade that I don’t mind risking on this.

like

Tax question: married filing jointly for 1st time next year. Company recommends/requires me to fill out its tax calculator. Is this required? Can I just leave it at 0? What are implications if I skip this exercise? Overpay? Underpay? Enough to maybe have a penalty? Me and wife are ~$250k/$150K=$400k total.

like

any suggestions on where to rent? preferably manhattan downtown or midtown. budget is ~2.1k or so. priorities are having a doorman, elevator, laundry in building at the very least

like

Is flipping houses worthwhile? I like decorating and renovating, so I'm thinking that maybe I could go into this and try my luck.

like

Let's say through a combination of aggressive saving, high income, and savvy investments, I manage to save several million by the time I'm 40.

If at that time I decided to pursue my passion and go to law school so that I can be an affordable attorney for worthy causes, will my age hold me back from getting into law school?

likeupliftinghelpful

Hi new to crypto! What apps/sites would you all recommend to start investing? I have Robinhood but it doesn’t have a lot of the crypto options

like

Whats the second source of income for a IT employee ?

like

Here's the best help I can offer to try and move your fake ownership of BTC on Robinhood- I hope this helps...

Post Photo
like
like

I’m seeing lots of posts about really bad losses. If you trade you’re going to lose money - hopefully not all the time, but many positions will be mistakes. But you need a process to find ideas and manage positions. Two books you should read are “The New Trading for a Livinng” and “The Laws of Trading.” Both look at psychology, process, and risk in different ways that can help you work out your own process. The next 18 months will be much harder than the last 18 - time to start learning.

likehelpful

Looking to buy in the DMV suburbs (northern VA). Is this the wrong time for such a move? Beyond down payment, got about 6mo emergency fund and must tap into it for moving&house expenses like furniture

like

More Posts

Does anyone else feel that calling some minority SA hires “diversity fellows” and the like is somewhat of a dog whistle? If top firms were really committed to DEI, wouldn’t they just hire more unrepresented SAs rather than making them advertise that they were hired as a part of some woke initiative?

like

I am working in CG as a consultant with close to 9 years of experience and 9 lacs CTC. Is it ok or should the package be more? Can I ask HR for salary correction? What is the range like in the B2 level?

like

McKinsey & Company How is wlb at qb mckinsey? How are the projects? Any chance of work from home? If I have offer from product based company also, what should I choose? QuantumBlack McKinsey & Company

like

Is nagarro round 2 managerial or technical?

What's the word on Havas Chicago? Does any good work ever come out of there? What's the pay like? Culture ok?

like

Hello,
May i know in how many days i will be able to get a project after joining? And the training provided will be from the project perspective or from overall perspective. TIA

like

Has anyone ever been to the Alo Restaurant? I have never been there myself but I was wondering if this would be a good setting to propose?

like

Hello everyone! I am looking for referrals in Scotiabank (specifically Research Consultant). Any leads will be appreciated. Thanks in advance

like

What tha actual f. "...good practice..." "... ominous weapons..."???

Post Photo
like

Anyone else following Rocket Lab’s debut today?

like

Anybody wanna refer me to PWC 👀

like

Every walkthrough that lasts longer than 2 hours makes me want to quit

like

Thoughts on Spotify after the dip?

like

Just did biometrics today in NJ. How long should I expect to wait for EAD after this step?

like

I have a jewelry addiction. And I’m dying to buy jewelry again now. 🥺

like

Hi Guys,

May I know the best content (books/videos/courses) to get the strong fundamentals and advance knowledge of GCP Cloud and DevOps tools to achieve expertise in DevOps & cloud Architect design.

Pleas don't suggest good basic courses over udemy.

like

Is big 4 PCS a dead path?

like

Listen to "all I need" by prateek kuhad. Best song. On loop here🤗

like

Tips for interview for Accenture Strategy Development Program? Anyone familiar of the starting salary?

Working at a boutique transactiona firm. First year did not receive much guidance and made a few errors, one of which could have been a deal but ended up being fine but overall I worked hard, billed hours above target and showed a willingness to learn. Three main partners in the group. I feel like I may have been written off by the one partner, still get a fair amount of work from another and the third has never really given work but has a rep for doing things alone or using seniors. Contd below

like

Additional Posts in Finance

Any one work for anyone work for LPL Financial that could share their experience with the company? Looking at roles within the firm and curious to see how flexible they are with remote work and starting salaries for AVP

like

What are some questions people ask for lateral interviews?

like

Roth vs Traditional 401k, thoughts?

like

Think a bear market's on the horizon?

like

I'm an associate and I'm still suffering from imposter syndrome. Who else is with me?

like

I love that my 401k gets $200 in dividends every quarter

like

Is this the end of days for our love affair with cryptocurrencies?

like

Does having a CVA (certified valuation analyst) useful? have heard mixed reviews

like

How much notice period does your firm require and has anyone quit without giving the full notice period?

like

Hello!
I'm italian, 26 yo and currently working in France as financial analyst.
Work environment is great, friendly and multicultural but I don't like the job at all.
Personal life is not so nice since I manage to see my family and gf every 30/45 days only. Colleagues have their own lives and at the end we don't hang out much.
My dilemma is:
A) going back to Italy at a lower salary with less growth opps but better personal life or
B) Switching my job here and hold on

What would you do?

Thx! :)

like

We have a big project going on and I am the only point person(initiate it, did lot of work, and knows the deets well), seems like my mgr wants to get a headcount. But I want to use this opportunity to get promoted, how can I get this across? Mgr is new(they fired my old mgr), mgr’s mgr is new too(re-org). So not sure if I should/can make a case, or how.

like

My friends and I brought up the black and blue dress, and it's amazing to me how many of them still see white and gold. What do you see?

like

I am currently finishing up CFP course work. Does anyone have tips or tricks for studying for the actual exam? I am particularly concerned about the investment planning section. I have 12 plus years in the industry and CRPC. I do planning literally everyday but a test is a test and this is the module I have had the most trouble with.

like

What does your firm offer in terms of career development and support and how would you rate the quality of those initiatives? I feel like I've plateaued and haven't grown professionally for some time.

like

When your analyst pings you with a text at 2am about the model they're working on: "Done!"

like

How much are you contributing to your 401k?

For those of you who are no longer in programs, is the mid-year or final review that determines your bonus? Appreciate any insights!

like

Happy Monday! Heads be rollin today 🙃

like

Ladies, where do you shop for versatile work outfits?

like

I have a 12 hour layover in Houston next weekend – any tips on what to do to kill the time?

like

New to Fishbowl?

Download the Fishbowl app to
unlock all discussions on Fishbowl.
That was just a preview…
Sign Up to see all discussions
  • Discover what it’s like to work at companies from real professionals
  • Get candid advice from people in your field in a safe space
  • Chat and network with other professionals in your field
Sign up in seconds to unlock all discussions on Fishbowl.

Already a user?
Login here

Share

Embed this post

Copy and paste embed code on your site

Preview

Download the
Fishbowl app

See what’s happening in your industry
from the palm of your hand.

A phone with Fishbowl app

Scan your QR code to download
Fishbowl app on your mobile

Download app

Sign up for free to view this conversation on Fishbowl

By continuing you agree to Terms of Use and Privacy Policy

Already have an account? Log in

Sign up for free to continue using Fishbowl

By continuing you agree to Terms of Use(New) and Privacy Policy(New)
Messaging rates may apply

Already have an account? Log in

For account settings, visit Fishbowl on Desktop Browser or

General

Legal