The importance of cash flow informationfor many years up

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The Importance of Cash Flow Information:

For many years up through the mid-1970's, there existed a nation-wide chain of retail stores by the name of "W.T. Grant & Co.". These stores often served as one of the "flagship" stores in shopping malls. W.T. Grant & Co. filed for Chapter bankruptcy. This means that the company was liquidated and went out of business. You will not find a W.T. Grant store in existence today. Interestingly, if we were to examine the income statement of that company for each of the last few years of its existence, we'd find that the company was profitable. Its revenues exceeded its expenses, and the company thus reported a "net income" (as opposed to a net loss).

How is it possible that a company can be profitable and yet find it necessary to completely liquidate its operations and cease to exist?

Reference no: EM13377187

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