Economic profits can exist even when a firm is operating at a loss in terms of cash flow because they account for both explicit and implicit costs.

Economic profits are different from regular profits because they consider more than just the money a business makes and spends. When a firm has economic profits, it looks at both explicit costs, which are the actual cash payments for things like rent and salaries, and implicit costs, which are the opportunity costs of using resources in one way instead of another. For example, if a business owner could earn $50,000 working for someone else but chooses to run their own business instead, that $50,000 is an implicit cost. So, even if the business isn't making cash flow, it could still have economic profits if the total revenue exceeds both these types of costs. This means a firm can technically be losing cash but still be making a profit when all costs are taken into account.