What could lead a company with positive EBITDA to declare bankruptcy?

A company with positive EBITDA indicates it is generating earnings from operations before accounting for interest, taxes, depreciation, and amortization. However, positive EBITDA alone does not guarantee overall financial health. Excessive capital expenditures can lead to bankruptcy as they may significantly increase a company's financial obligations and cash outflows without immediately generating corresponding revenue. This kind of expenditure could drain the company's liquidity, limit its ability to service debt, or pay for operational expenses, leading to cash flow issues despite having positive operating profit metrics.

In contrast, high sales volume and low production costs would typically contribute positively to a company's overall financial stability, while low interest rates can alleviate financial burdens associated with debt, and having high levels of cash on hand positions a company favorably to manage operational challenges. However, if a company is overly aggressive with capital investments without sufficient returns, it risks financial distress, even if it is currently profitable on an operational basis.