What could lead a company to have positive EBITDA but still go bankrupt?

A company can have positive EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) but still face bankruptcy due to excessive capital expenditures. EBITDA measures a company’s operational profitability, but it does not account for cash outflows related to capital investments that are necessary to maintain or grow the business.

If a company invests heavily in long-term assets without generating enough cash flow from its operations to support these investments, it can lead to cash shortages. This situation is particularly pertinent when capital expenditures exceed what the company can sustain, even if current operations are profitable. As a result, the company may struggle to meet its liabilities and debts, ultimately leading to bankruptcy despite showing a positive EBITDA.

While other factors like low revenue growth, high employee salaries, or low customer satisfaction can affect overall business performance and potential profitability, they do not specifically illustrate the disconnect between positive EBITDA and cash flow due to capital investment mismanagement as clearly as excessive capital expenditures do.