Why is it that sometimes an increase in sales can lead to a decrease in cash flow?

View More Business Finance QuestionsPosted 4/12/10 at 3:10pm

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User Contributed Answers (2)

Sales, generally cost money to realize due to the increase in company liability.
In other words, the company must finance the cost of the sales first in most cases then collect the money for the sale. If everything goes according to plan you should end up with more money in the end.

Bill Beckworth
CEO Debt Free Living

Posted 4/16/10 at 8:51amWas this answer helpful? Yes / No

There is an optimal point for producing goods which the variable cost per unit is the lowest and the production is the highest. Think a bell curve... Once you start producing over the optimal point the cash in starts declining as the processes of making the goods becomes more expensive.

Posted 4/21/10 at 9:18amWas this answer helpful? Yes / No

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