The Profit Paradox: Why Profitable Companies Go Broke

Many profitable companies go bankrupt because they confuse profit with cash flow. Using the Toys R Us example, which posted $751 million in profit before bankruptcy, this article reveals how businesses can show strong profits while hemorrhaging cash. Through detailed examples showing how $92,000 in profit can translate to only $8,000 in actual cash, readers learn the critical difference between accounting profits and cash flow management - and why mastering both is essential for business survival and growth.

Martin HollandAugust 5, 2025Anneal Business Coachingcash flow management, business profit vs cash flow, small business financial management, cash flow problems, business bankruptcy prevention, profit and loss statement, accounts receivable management, business cash flow analysis, small business survival, financial planning for businessesComment