FCF Institute
Free Cash Flow Factor Exploring Strong and Sustainable Profitability
Implications of Accruals and Growth on Predicting Future Profitability and Market Mispricing
In contrast to cash flow, the growth in long-term net operating assets and accruals display a lower degree of persistence in their capacity to gauge future earnings performance. This disparity can be attributed to their differential impact on the denominator of one-year-a...
Cash Flows: A Better Indicator of Future Profitability
The argument over which metric, cash flows or earnings, better predict profitability has been ongoing for years. A recent study by Foerster, Tsagarelis, and Wang, looked at the mixed evidence and attempted to answer two questions using S&P 1500 from 1994 to 2013: (1) ...
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