The relationship between earnings and stock prices has diminished over the years, but the ability of earnings to forecast futures cash flows has not.

Question

Quizplus · Accepted Answer

While the relationship between earnings and stock prices may have decreased in recent years as other factors such as sentiment and macroeconomic conditions came to play a larger role, earnings are still a crucial indicator of a company's ability to generate future cash flows and earnings growth, therefore providing valuable information for investors in forecasting future stock prices.

The Relationship Between Earnings and Stock Prices Has Diminished Over