(Solution) If Investors Are Truly Interested In Knowing A Company's Future Cash Flows, Why Would They Care About Current Earnings? | Snapessays.com


(Solution) If investors are truly interested in knowing a company's future cash flows, why would they care about current earnings?


If investors are truly interested in knowing a company's future cash flows, why would they care about current earnings?

 

a. Net income provides an estimate of sustainable "annualized" long-run future free cash flows.

 

b. Accruals and deferrals imitate the "lumpiness" inherent in year-to-year cash flows.

 

c. Investors are better able to predict a company's future free cash flows using accrual earnings.

 

d. Current earnings show a best estimate of cash balance that firm holds at the end of year.

 


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This question was answered on: May 23, 2022

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