What we don't know is this: does the company have a profitability problem or a cash problem - the two are different. A business can be profitable, but have no cash - and that's a big problem. Many a profitable company has been sunk as a result of poor cash flow.

Whilst we don't know too much about the situation, it does sound like they make profit, but struggle for cash - all that upfront cost of materials PE is referring to. But this is normal in lots of businesses - the best example is manufacture of Whisky. You invest in the plant, labour, ingredients and materials to make the stuff, and then you have to wait 5-10 years before you can sell it as anything respectable. It might sell at a fantastic profit - but only if you have the cash to get to that point in time.

There are ways of improving cashflow - let's hope they find one!