Re-read $CSL 's performance report as filed on 10th Feb, 2020. The stated profits include earnings collected (cash flows) and those not yet collected (accruals). Accruals are thus the firm’s forecast of future benefits. see financial-education-hub.com.... The forecast, however, may have errors. Some companies can even use accruals to manipulate their earnings. As a result, accruals may not be fully realized, leading to high accruals associating with low subsequent cash flows. Accordingly, two companies with the same level of reported earnings, the one with high accruals is more likely to have lower profitability next year.
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