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Problem:

You are a controller for a large corporation. When you present financial statements for the year to the board of directors, they are puzzled by the fact that the firm has had a very profitable year but does not have enough cash to pay its bills on time.

Required:

Explain to the board of the directors how a firm can be profitable, yet not have enough cash to pay its bills and dividends. (Please be thorough in your response.)

Note: Provide support for your rationale.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91162675

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