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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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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M949971

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