FCF Research | Free Cash Flow Factor Exploring Strong and Sustainable Profitability
This paper discusses how Free Cash Flow is a superior current profitability indicator compared to earnings when it comes to Quality investing. It reveals how the quality of a company’s earnings is heavily influenced by its use of accounting accruals and that a non-linear correlation exists between a company’s use of accruals and its stock price performance after controlling for profitability.
Vince (Qijun) Chen, Director of Research, Connect with Vince on LinkedIn