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    Market Earnings and Cash Flows

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    Consider the following statement: "I don't know why anyone would ever try to value earnings. Obviously, the market knows that earnings can be manipulated and only values cash flows." Discuss in 1 paragraph.

    Consider the statement that "the DCF valuation method has increased managers' focus on short-term rather than long-term performance, since the discounting process places much heavier weight on short-term cash flows than long-term ones." (Comment with few sentences)

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    https://brainmass.com/business/cash/market-earnings-and-cash-flows-148718

    Solution Preview

    The response addresses the queries posted in 305 words with references.

    //In this paper, we will discuss earnings and cash flows for estimating the financial status and growth of the organization. We will elaborate the importance of earnings to understand the growth of the organization/

    The evaluation of financial position and operational activities can be judged by the earning values because a layman can easily understand whether the organization is growing or not. But, by evaluating cash flows, a layman can not judge the growth of ...

    Solution Summary

    The response addresses the queries posted in 305 words with references.

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