Recent research indicates that stock returns correlate better with

Question

Quizplus · Accepted Answer

Accrual earnings are a better predictor of stock returns than realized operating cash flows because they include both cash and non-cash items that affect a company's financial performance. Non-cash items, such as depreciation and amortization, can have a significant impact on a company's earnings, but they do not affect its cash flow. As a result, accrual earnings provide a more complete picture of a company's financial performance than realized operating cash flows.

Recent Research Indicates That Stock Returns Correlate Better with