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Are Cash Flows Better Stock Return Predictors Than Profits
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Book Synopsis Are Cash Flows Better Stock Return Predictors Than Profits? by : Stephen R. Foerster
Download or read book Are Cash Flows Better Stock Return Predictors Than Profits? written by Stephen R. Foerster and published by . This book was released on 2017 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: Although various income statement-based measures predict the cross section of stock returns, direct method cash flow measures have even stronger predictive power. We transform indirect method cash flow statements into disaggregated and more direct estimates of cash flows from operations and other sources and form portfolios on the basis of these measures. Stocks in the highest-cash-flow decile outperform those in the lowest by over 10% annually (risk adjusted). Our results are robust to investment horizons and across risk factors and sector controls. We also show that, in addition to operating cash flow information, cash taxes and capital expenditures provide incremental predictive power.
Book Synopsis Cash Flow and Security Analysis by : Kenneth S. Hackel
Download or read book Cash Flow and Security Analysis written by Kenneth S. Hackel and published by Createspace Independent Publishing Platform. This book was released on 2017-07-05 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This updated and expanded second edition of Book provides a user-friendly introduction to the subject, Taking a clear structural framework, it guides the reader through the subject's core elements. A flowing writing style combines with the use of illustrations and diagrams throughout the text to ensure the reader understands even the most complex of concepts. This succinct and enlightening overview is a required reading for all those interested in the subject . We hope you find this book useful in shaping your future career & Business.
Book Synopsis Asset Pricing Theory by : Costis Skiadas
Download or read book Asset Pricing Theory written by Costis Skiadas and published by Princeton University Press. This book was released on 2009-02-09 with total page 363 pages. Available in PDF, EPUB and Kindle. Book excerpt: Asset Pricing Theory is an advanced textbook for doctoral students and researchers that offers a modern introduction to the theoretical and methodological foundations of competitive asset pricing. Costis Skiadas develops in depth the fundamentals of arbitrage pricing, mean-variance analysis, equilibrium pricing, and optimal consumption/portfolio choice in discrete settings, but with emphasis on geometric and martingale methods that facilitate an effortless transition to the more advanced continuous-time theory. Among the book's many innovations are its use of recursive utility as the benchmark representation of dynamic preferences, and an associated theory of equilibrium pricing and optimal portfolio choice that goes beyond the existing literature. Asset Pricing Theory is complete with extensive exercises at the end of every chapter and comprehensive mathematical appendixes, making this book a self-contained resource for graduate students and academic researchers, as well as mathematically sophisticated practitioners seeking a deeper understanding of concepts and methods on which practical models are built. Covers in depth the modern theoretical foundations of competitive asset pricing and consumption/portfolio choice Uses recursive utility as the benchmark preference representation in dynamic settings Sets the foundations for advanced modeling using geometric arguments and martingale methodology Features self-contained mathematical appendixes Includes extensive end-of-chapter exercises
Book Synopsis The Effect of Contextual Factors on the Information Content of Cash Flows in Explaining Stock Prices - the Case of Amman Stock Exchange by : Ali M. Al-Attar
Download or read book The Effect of Contextual Factors on the Information Content of Cash Flows in Explaining Stock Prices - the Case of Amman Stock Exchange written by Ali M. Al-Attar and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This article aims to determine which is better earnings or cash flows as performance measure. We follow the more direct approach used in several recent U.S. studies, in which earnings and cash flows are considered as competing variables. Specifically, our methodology is a development of the study of Dechow (1994). We provide a replication of her main analysis, and then extend this to deal with the effect of earnings permanence, earnings growth and firm size on the value relevance of cash flow and earnings. Our study provides an evidence on the relevance of cash flow figures for investors in their investment decision in an emerging stock market. The study covers the case of Amman Stock Exchange (ASE) and employs data on a sample of industrial firms. The time horizon of this study includes the period of 1993-2001. The results of the current study indicate that earnings and cash flows have information content regarding the prediction of future cash flows. Cash flows and earnings separately have a significant association with stock return. The results show that there is no significant difference between the ability of earnings and cash flows in explaining the variation in stock return. Furthermore, as the earnings growth is low and the firm's size is small, the operating cash flow considered better than earnings as performance measure.
Book Synopsis The Role of Accruals in Predicting Future Cash Flows and Stock Returns by : Francois Brochet
Download or read book The Role of Accruals in Predicting Future Cash Flows and Stock Returns written by Francois Brochet and published by . This book was released on 2009 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: We revisit the role of the cash and accrual components of accounting earnings in predicting future cash flows using out-of-sample predictions, firm-specific regression estimates, and different levels of aggregation of the dependent variable, with market value of equity as a proxy for all future cash flows. We find that, on average, accruals improve upon current cash flow from operations in predicting future cash flows. As accruals' contribution to the prediction of future cash flows varies significantly across firm-quarters, we proceed to investigating determinants of accruals' predictive ability for future cash flows. We find that positive accruals are more likely to improve upon current cash flow in predicting future cash flows. Accruals' contribution is also increasing in cash flow volatility and decreasing in the magnitude of discretionary accruals and of special items. Finally, portfolios formed on stock return predictions using information from current CFO and accruals yield significantly positive returns on average, as opposed to CFO alone. Hence, investors using predictions based on current accounting data to pick stocks are better off taking accruals into account. We also find that Sloan's (1996) accrual anomaly is related to our accrual contribution anomaly. Indeed, when accruals' contribution to future cash flow prediction is the highest, the accrual anomaly vanishes.
Book Synopsis How to Pick Quality Shares by : Phil Oakley
Download or read book How to Pick Quality Shares written by Phil Oakley and published by Harriman House Limited. This book was released on 2017-05-22 with total page 150 pages. Available in PDF, EPUB and Kindle. Book excerpt: How To Pick Quality Shares provides a three-step process for analysing company financial information to find good investments. The three steps boil down to finding quality companies, avoiding dangerous or risky companies, and not paying too much for companies’ shares. Applying the in-depth techniques described here will give investors a better understanding of companies, and an edge over other investors, including professional investors and analysts. Phil Oakley, an experienced investment analyst and private investor, guides the reader step-by-step through these three stages: 1. For the first step, he shows how to identify the kind of high-quality companies that are capable of being profitable investments over the long term. Important themes are how much a company earns on the money it invests, reliable measures of profit and the importance of cash flow. 2. Next, he shows how to spot the dangers and risks that could lead to a company being a bad investment. Here the focus is on how to analyse debt, in particular hidden debt and pension fund deficits. 3. Lastly, he shows how to value a company’s shares and determine what is a reasonable price to pay to invest in that company. Phil shows why some common shortcuts to valuing shares are not very useful and how to use cash profits to value shares more reliably. At each stage, Phil explains where the investor needs to look in company financial statements to get the information they need and how to analyse this information. Illustrative examples of analysis of real company financial statements are used throughout. If you have a company’s latest annual report and its current share price you have all the information you need to be a successful investor. How To Pick Quality Shares shows you how.
Book Synopsis Cash Flow Versus Earnings as Predictors of Future Stock Prices by : Dean M. Suzuki
Download or read book Cash Flow Versus Earnings as Predictors of Future Stock Prices written by Dean M. Suzuki and published by . This book was released on 1969 with total page 109 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Accounting for Value by : Stephen Penman
Download or read book Accounting for Value written by Stephen Penman and published by Columbia University Press. This book was released on 2010-12-30 with total page 265 pages. Available in PDF, EPUB and Kindle. Book excerpt: Accounting for Value teaches investors and analysts how to handle accounting in evaluating equity investments. The book's novel approach shows that valuation and accounting are much the same: valuation is actually a matter of accounting for value. Laying aside many of the tools of modern finance the cost-of-capital, the CAPM, and discounted cash flow analysis Stephen Penman returns to the common-sense principles that have long guided fundamental investing: price is what you pay but value is what you get; the risk in investing is the risk of paying too much; anchor on what you know rather than speculation; and beware of paying too much for speculative growth. Penman puts these ideas in touch with the quantification supplied by accounting, producing practical tools for the intelligent investor. Accounting for value provides protection from paying too much for a stock and clues the investor in to the likely return from buying growth. Strikingly, the analysis finesses the need to calculate a "cost-of-capital," which often frustrates the application of modern valuation techniques. Accounting for value recasts "value" versus "growth" investing and explains such curiosities as why earnings-to-price and book-to-price ratios predict stock returns. By the end of the book, Penman has the intelligent investor thinking like an intelligent accountant, better equipped to handle the bubbles and crashes of our time. For accounting regulators, Penman also prescribes a formula for intelligent accounting reform, engaging with such controversial issues as fair value accounting.
Book Synopsis Financial Reporting and Analysis by : Lawrence Revsine
Download or read book Financial Reporting and Analysis written by Lawrence Revsine and published by McGraw-Hill/Irwin. This book was released on 2008-06-30 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial Reporting & Analysis (FR&A) by Revsine/Collins/Johnson/Mittelstaedt emphasizes both the process of financial reporting and the analysis of financial statements. This book employs a true "user" perspective by discussing the contracting and decision implications of accounting and this helps readers understand why accounting choices matter and to whom. Revsine, Collins, Johnson, and Mittelstaedt train their readers to be good financial detectives, able to read, use, and interpret the statements and-most importantly understand how and why managers can utilize the flexibility in GAAP to manipulate the numbers for their own purposes.
Book Synopsis Accounting Trends and Techniques: U.S. GAAP Financial Statements--Best Practices in Presentation and Disclosure by : AICPA
Download or read book Accounting Trends and Techniques: U.S. GAAP Financial Statements--Best Practices in Presentation and Disclosure written by AICPA and published by John Wiley & Sons. This book was released on 2017-12-04 with total page 800 pages. Available in PDF, EPUB and Kindle. Book excerpt: Updated for new accounting and auditing guidance issued, this valuable tool provides hundreds of high quality disclosure examples from carefully selected U.S. companies of different sizes, across industries such as banking, credit and insurance, communication services, and healthcare from such organizations as Scotts Miracle-Gro, Coca-Cola, Caterpillar, and BB&T. Illustrations of the most important, immediate, and challenging disclosures, such as derivatives and hedging, consolidations, and fair value measurement are provided. Hot topics include statement of cash flows, going concern, and business combinations and intangibles. This edition also provides clear, direct guidance to help you understand and comply with all significant reporting requirements and detailed indexes to help you quickly find exactly what you need.
Book Synopsis Profitability, Investment, and Cash-Flow As Stock Price Predictor by : Rowland Bismark Pasaribu
Download or read book Profitability, Investment, and Cash-Flow As Stock Price Predictor written by Rowland Bismark Pasaribu and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This research aim to calculate influence corporate financial performance to stock return. Multiregression model follow Fama and French procedure. Result of first hypothesis confirmed statistically, that the difference of stock of return pursuant to finance performance not automatically own significant influence in stock return prediction itself. Other result confirmed that all the predictor used has no significant influence to stock return both simultaneously and partial.
Book Synopsis Do Investors Fully Understand the Economic Implications of Cash Flows from Operations? by : Mei Luo
Download or read book Do Investors Fully Understand the Economic Implications of Cash Flows from Operations? written by Mei Luo and published by . This book was released on 2004 with total page 178 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Stock Returns by : George I. Ellison
Download or read book Stock Returns written by George I. Ellison and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In finance, rate of return (ROR) is the ratio of money gained or lost on an investment relative to the amount of money invested. This amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net income/loss. The money invested may be referred to as the asset, capital, principal, or the cost basis of the investment. ROI is usually expressed as a percentage rather than a fraction. Investments generate cash flow to the investor to compensate the investor for the time value of money. The main factors that are used by investors to determine the rate of return at which they are willing to invest money include estimates of future inflation rates, estimates regarding the risk of the investment and whether or not the investors want the money available ("liquid") for other uses. This new book gathers the latest research from around the world on this topic.
Book Synopsis Accruals, Cash Flows, and Operating Profitability in the Cross Section of Stock Returns by : Ray Ball
Download or read book Accruals, Cash Flows, and Operating Profitability in the Cross Section of Stock Returns written by Ray Ball and published by . This book was released on 2015 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: Accruals are the non-cash component of earnings. They represent adjustments made to cash flows to generate a profit measure largely unaffected by the timing of receipts and payments of cash. Prior research uncovers two anomalies: expected returns increase in profitability and decrease in accruals. We show that cash-based operating profitability (a measure that excludes accruals) outperforms measures of profitability that include accruals. Further, cash-based operating profitability subsumes accruals in predicting the cross section of average returns. An investor can increase a strategy's Sharpe ratio more by adding just a cash-based operating profitability factor to the investment opportunity set than by adding both an accruals factor and a profitability factor that includes accruals.
Book Synopsis Testing the Cash-flow Relevance of Three Concepts of Profit by : Robert F. Sharp
Download or read book Testing the Cash-flow Relevance of Three Concepts of Profit written by Robert F. Sharp and published by . This book was released on 1980 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis 1998 Statement of Financial Accounting Concepts by : Financial Accounting Standards Board (FASB)
Download or read book 1998 Statement of Financial Accounting Concepts written by Financial Accounting Standards Board (FASB) and published by Wiley. This book was released on 1998-09-07 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The FASB Statements of Financial Accounting Concepts contains the full text of five of the six Statements of Financial Accounting Concepts issued to date. The existing concepts are intended to serve the public interest by setting the objectives, qualitative characteristics, and other concepts that guide selection of economic events to be recognized and measured for financial reporting. Unlike a Statement of Financial Accounting Standards, a Statement of Financial Accounting Concepts does not establish generally accepted Accounting Principles.
Book Synopsis Net Cash Flow Yield and the Cross-Section of Stock Returns by : Yiqing Dai
Download or read book Net Cash Flow Yield and the Cross-Section of Stock Returns written by Yiqing Dai and published by . This book was released on 2019 with total page 67 pages. Available in PDF, EPUB and Kindle. Book excerpt: Fama and French (2006) decompose the valuation equation into the book to market ratio (BM), profitability and investment to estimate expected returns. In this paper, I attempt to integrate information from the valuation equation into one variable, net cash flow yield (NCFY), to capture expected returns. NCFY performs similarly to or better than a combination of BM, profitability and investment in explaining a broad set of return anomalies. A fundamentals-based four-factor model consisting of the market, size, monthly-updated NCFY, and earnings momentum factors dominates the recent models of Hou, Xue, and Zhang (2015), Barillas and Shanken (2017b), and Stambaugh and Yu (2017).
