Yes and no. While you're technically correct that there are well-accepted principles, they don't always have much bearing on whether a company will be solvent,

Yes and no. While you're technically correct that there are well-accepted principles, they don't always have much bearing on whether a company will be solvent, or easy to finance. Example 1: Amazon's core retail business. Not very "profitable". Yet, it provides a massive amount of float through their ability to get inventory quickly from suppliers on long payment terms (30-60 days), that's sold to customers in something like 7-14 days with immediate collection. That means Amazon has something like 2-6 weeks cash, at hundreds of billions/revenue per year (8-40 billion in interest-free cash), as effectively an interest-free loan. That might not be profitable but it's very easy to see how that allows cheap financing of capital-intensive investment. Amazon is explicitly run with emphasis on cashflow dynamics (less on profit). It's worked exceedingly well for them. Example 2: A hotel might run very profitably on a unit basis but require so much upfront capital to finance that it's practically impossible to build. My point isn't that accounting isn't "real". Money is also in some sense a "shared fiction" [1] and yet it's quite real. It's just that looking merely at accounting profit/loss doesn't really tell you much about the operational dynamics of a company. It took me a really long time to understand this. [1] From "Sapiens", a great book, explaining the role of fiction in real-world decision-making and beliefs.