Will a firm avoid any cash shortage if the sales revenue exceed all costs?

While exceeding sales revenue over costs is a positive indicator of profitability, it does not guarantee that a firm will avoid cash shortages. Cash flow issues can arise from factors such as delayed customer payments, high inventory levels, or unexpected expenses, which may not be immediately reflected in profit calculations. Therefore, effective cash flow management is essential to ensure that a firm maintains sufficient liquidity to meet its obligations, regardless of profitability.