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Cashflows question
Hi, I'm new to investing and I've read according to several sources that people say cash flows are more important than earnings, because earnings can be manipulated.
I'm a 2nd year accounting student, and I find have some questions bout that arguement since cashflows can also be manipulated, if anything, possibly even easier. The increase in debt financing / equity financing increases cashflows during the year. But that is not indicative of an imporving company. In the case wiht cashflows, it also doesn't look at amortization, which is a non cash cost allocation, but doesn't that still have effects on the earnings of the company far down the line? |
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