Liquidity risk can arise even if a company is technically profitable due to:

Liquidity risk refers to the potential difficulty a company may face in meeting its short-term financial obligations due to an insufficient amount of liquid assets. Even if a company is profitable on paper, this does not guarantee that it has enough cash or easily convertible assets on hand to cover its immediate liabilities, such as payroll, supplier payments, or other debts with upcoming due dates.

A lack of liquid assets means that while the company's overall profitability may indicate strong performance, its ability to convert assets into cash quickly is crucial in ensuring that it can operate smoothly. Profitability often reflects overall health through revenue generation, but if those profits are tied up in non-liquid assets (like real estate or long-term investments), they can't be utilized promptly when cash is needed.

The other factors referenced, such as high operational costs, market competition, and credit issues with suppliers, can indeed affect a company's overall financial health, but they do not specifically characterize the immediate concerns surrounding liquidity risk as clearly as the absence of liquid assets does.