A good predictor of future cash flows includes:
A)net income in past year.
B)net income in current year.
C)past cash receipts and past cash payments.
D)cash receipts and cash payments in the current year.

Question

Quizplus · Accepted Answer

Cash receipts and cash payments in the current year are the most relevant indicators of future cash flows. Net income may not accurately reflect cash inflows and outflows, and past cash receipts and payments may not be indicative of future cash flows. Therefore, it is best to base predictions on current cash activity.

A Good Predictor of Future Cash Flows Includes