Can a company be profitable but still short on cash?

Yes. Profit is accrual-based, while cash flow is timing-based. Slow collections, high inventory, or heavy capex can create a cash squeeze.

Quick Definition

Yes — profit is accrual-based (recognized when earned, not collected). A company can show profits while running out of cash due to slow receivables, heavy inventory build-up, or large capital expenditures.

Use this concept with tools

DCA

Periodic investing with expected annual return.

Fee Drag

Impact of ongoing fees on final value.

ROI + Annualized

Calculate total ROI and annualized return.

NPV

Discounted cashflow valuation.

Related concepts

What is free cash flow?

Free Cash Flow (FCF) = Operating Cash Flow − Capital Expenditures. It is the actual cash a business generates after maintaining its assets. Warren Buffett considers FCF the true measure of a company's earning power.

What does a cash flow statement tell me?

The cash flow statement tracks actual cash in three categories: operating (core business), investing (asset purchases), and financing (debt & equity). Strong operating cash flow is the gold standard of business health.

Why do accounts receivable and inventory matter?

Rapidly growing accounts receivable signals slow cash collection; ballooning inventory may mean weak demand. Both can lead to write-offs, cash shortfalls, or earnings quality concerns.