If a company has a year of positive EBITDA but still goes bankrupt, what could be a contributing factor?

When a company has a year of positive EBITDA but still faces bankruptcy, one contributing factor can be excessive capital expenditures. Positive EBITDA indicates that the company's operating profitability is strong, yet this does not fully account for cash flow needs beyond operational performance.

Excessive capital expenditures (CapEx) can lead to cash shortages if the funds are used inefficiently or if they do not contribute to sufficient returns that exceed the cost of the investments. Capital expenditures can include investments in property, plant, and equipment, or in expanding capacity, which may draw heavily on cash reserves, especially if the company is financing these purchases with debt. As a result, even if the company's core operations are generating positive cash flow, large financial commitments can strain liquidity and create an unsustainable scenario that may lead to bankruptcy.

In contrast, low interest expenses, high dividends paid out, and consistent revenue growth are generally positive indicators for a company's financial health. Low interest expenses suggest manageable debt levels, whereas high dividends could signal profitability if sustainable. Consistent revenue growth typically points to a robust demand for products or services. While these factors can also contribute to overall financial performance, excessive capital expenditures directly affect liquidity and cash flow, making it a viable reason for a company to file for bankruptcy despite