The owner of a small manufacturing company is confused after going through the account statements.

The accountant of the company has informed the owner that the company’s net increase is negligible this year. Cash has increased steadily since the inception of the company, about 6 years ago, so the owner believes that the company must be profitable. Inventories, receivables, payables, long term borrowings and share capital have not changed significantly. No dividends have been paid. Explain why cash has increased in the face of negligible profit? Give illustrations of the transactions that would clarify your explanation.