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Net Income VS Cash Flows

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Compare and contrast net income and cash flows.
Compare and contrast market value and book value of the assets.

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Solution Summary

This solution includes a comparison and contrast between net income and cash flows. The solution also compares and contrasts market value with book value.

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Cash Flows vs Net Income
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Operating cash flow is the lifeblood of a company and the most important barometer that investors have. Although many investors gravitate toward net income, operating cash flow is a better metric of a company's financial health for two main reasons. First, cash flow is harder to manipulate under GAAP than net income (although it can be done to a certain degree). Second, "cash is king" and a company that does not generate cash over the long term ...

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