> So you use money from the 60k in "profit" to buy inventory, leaving you no profit.
That is incorrect. The business still has made a $60k profit, but they have no CASH since they had to redeploy that cash toward additional inventory (which leads to additional profits).
> At that point you haven't made anything. It looks like you're making money, but you aren't.
Again, sorry: You have made $60k in profits, but you're short on cash. Your business is making money -- you now have the next batch of inventory paid for and you were able to afford that with the profits from the previous batch. Those are real assets, But your business is indeed short on cash -- this is where revolving credit lines and similar financings come into play (which carry a cost and complexity of their own).
It's definitely a challenge!