Cash flow per share is a better indication of a firm's ability to make capital expenditure decisions and pay dividends than is earnings per share.

Question

Quizplus · Accepted Answer

Cash flow per share represents the amount of cash generated by a company and is available for capital expenditure and dividend payments. Earnings per share can be influenced by factors such as accounting treatments and non-cash items, which may not reflect the company's ability to make these decisions. Therefore, cash flow per share is a better indication of a firm's ability to make capital expenditure decisions and pay dividends.

Cash Flow Per Share Is a Better Indication of a Firm's