A Deep Dive Into Earnings Quality with Columbia Professor Doron Nissim
Excess Returns
00:00
Why Profitability Analysis Is So Important
Most companies use what is called the indirect approach for presenting cash form operations. You actually start with a number that you have at the end of the income statement. And this comparison and the adjustments that we need to make are very informative about earnings quality. So many times when we evaluate earnings quality, we do it not by focusing on the income statement but comparing amounts from the balance sheet,. With amounts from the cash flow statement.
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