Tommy Rowan is a very confused HR employee at Waddinglake Ltd. He had always associated company success with profit and yet, on the breakfast news that morning, the business correspondent had made the following announcement ‘Walls plc have just gone out of business despite making profits of £8m … further evidence that, when running a business, cash is king’.

Explain, with reference to the scenario above, how a company can go out of a business despite making a healthy profit. Name three user groups with a particular interest in the liquidity side of a business and briefly detail their individual needs. Explain why companies see the cash budget as one of the key financial statements in planning for the future.

Answer rating: 100% (QA)

Tommy Rowans confusion stems from the common misconception that profitability alone guarantees a companys success The scenario of Walls plc going out of business despite making profits of 8 million hi... View the full answer