A company has had positive EBITDA for the past 10 years, but it recently went bankrupt. How could this happen?

Several possibilities:

1. The company is spending too much on Capital Expenditures – these are not reflected at all in EBITDA, but it could still be cash-flow negative.

2. The company has high interest expense and is no longer able to afford its debt.

3. The company’s debt all matures on one date and it is unable to refinance it due to a “credit crunch” – and it runs out of cash completely when paying back the debt.

4. It has significant one-time charges (from litigation, for example) and those are high enough to bankrupt the company.