Overtrading
A situation where a business grows too rapidly without sufficient working capital to finance the expansion, leading to c...
Real World
Lush Cosmetics nearly collapsed in the early 2000s despite strong sales growth because it expanded its store network faster than its cash flow could support, struggling to pay suppliers on time.
Exam Focus
Distinguish overtrading from insolvency — a business can be profitable yet fail; use this to evaluate growth strategies.
How well did you know this?