So earnings go by accrual accounting system which is why we have a separate cash section after all. This can cause a mismatch.
What we see in a lot of growing companies is negative earnings, but positive cash flow. I’ve started to think about it recently and it has started to confuse me a bit. How does this get easily explained by “oh they’re a growing company”?.
Thinking about it it would seem that a growing company might have negative cash flows from investing into the future while having positive earnings only taking into account the expenses that go into making what they sell.
What is the reasoning behind the growing company with negative earnings pattern that we see so often?
Submitted March 15, 2021 at 02:14AM by Meeesh- https://ift.tt/3qMCmaO
