Big firm news today, $FARM released its detailed performance in the past year. Note that the reported earnings and cash flows are two different concepts. People call the distinction "accruals", which stands for a firm’s prediction of unrealized benefits. See the image below. However, managers may make mistakes intentionally or unintentionally in the prediction, 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.