b. How can a business earn large profits but have a small balance in Retained Earnings?
c. How can a business lose money for many years and still have plenty cash?
d. Give two reasons why a business can be profitable for many years and still have a cash shortage?
e. Suppose your business has $80,000 worth of liabilities that must be paid within the next three months. Your liquid (can be turned into cash quickly) assets total only $60,000, your sales and collections from customers are slow. Identify two ways to finance the remaining $20,000 you will need, so you can pay all of the liabilities when they are due.© BrainMass Inc. brainmass.com June 3, 2020, 11:02 pm ad1c9bdddf
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Below are my answers.
Anna Liza Gaspar
It would be sales. Selling is a regular activity of the company and sourcing cash directly from sales rather than from accounts receivable is sustainable.
Businesses can earn large profits, but still record small balances in their retained ...
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