$OSN today’s announcement of annual report gives a picture of the firm’s past year performance. The earnings reported by a firm often differ from its cash flows. This distinction, referred to as "accruals", speaks to the firm’s estimation of profits not yet received. See the image below. However, managers may make mistakes intentionally or unintentionally in the estimation, making the realization of accruals inconsistent with cash flows. From this perspective, the higher accruals in a firm’s reported earnings, the more likely it will record poor future earnings.