Asked by Nguyên Tr?ng on Jul 02, 2024
Verified
Earnings are a proxy-imperfect but the best we have-for free cash flow.
Free Cash Flow
The amount of cash generated by a company after accounting for capital expenditures, available for distribution among shareholders, debt repayment, or reinvestment.
Proxy-Imperfect
A substitute measure used in analysis or calculation that does not accurately represent the intended variable.
- Appreciate the pivotal significance of profit figures in forecasting sustainable long-term cash flows.
Verified Answer
SH
Sarah Hatton6 days ago
Final Answer :
True
Explanation :
Earnings give us an indication of the cash generated by a company, which is a proxy or approximation for free cash flow. While it is not a perfect measure, it is considered the best we have for estimating free cash flow.
Learning Objectives
- Appreciate the pivotal significance of profit figures in forecasting sustainable long-term cash flows.
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