Funds & Investing
IntermediateCan 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
Dollar-cost averaging (DCA) calculator — simulate periodic investments with expected annual returns. See long-term growth projections and total contributions. Free DCA calculator.
Fee Drag
Impact of ongoing fees on final value.
ROI + Annualized
Calculate total ROI and annualized return on investment. Compare scenarios, measure performance, and make data-driven investment decisions. Free ROI calculator.
NPV
Calculate Net Present Value (NPV) of future cash flows using your discount rate. Evaluate project viability and compare investment alternatives. Free NPV calculator.
Investor quotes to remember
“If you don't keep learning, others will surpass you.”
“The most dangerous words in investing are 'this time is different'.”
“I only bet when the odds are clearly in my favor.”
“Knowing what you don't know is more important than knowing what you do.”
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.