Analyse two reasons for a profitable business running out of cash.

Sure, here are two reasons why a profitable business might run out of cash:

1. High Accounts Receivable: If a business has a high amount of accounts receivable, it means that they have sold a product or service but have not yet received payment. This can create a cash flow problem because although the business is profitable on paper, they do not have the cash on hand to cover their expenses. This is especially common in businesses that offer credit terms to their customers.

2. Overinvestment in Inventory: Another reason a profitable business might run out of cash is if they have overinvested in inventory. If a business purchases too much inventory and it doesn't sell as quickly as anticipated, the business's cash is tied up in the inventory. This can lead to a shortage of cash to cover other expenses.

In both cases, the business is profitable but due to poor cash management, they can run out of cash. It's important for businesses to manage their cash flow effectively to avoid these situations.