- Location
- Cookie Jar
When a company's expenses outpace its income, it's called "losing money", not making. When people say the company is "making money", they usually, if not always, explicitly mean the inverse is true.
Right... so when company "makes money", but that money barely covers expenses, and there are ever increasing expenses, clearly the company does not have "money trouble".
Again, if expenses are rising faster than income can be generated, the company will have money trouble because it won't be able to have money to keep up with those expenses. It is not binary state of "no problems what so ever" or "literally losing money".
For example:
Company has machines that are old. Replacing them costs 50k. However, company is only making 5k in profits. Everything else is going into fixing those machines, and every year the expenses at maintaining those machines rises. However, market is not growing at the same rate. So company keeps making less and less money, while needing to replace old machines. Company now has money trouble, and needs to either find a way to cut expenses or find new source of money.