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5. If investors are truly interested in knowing a companys future cash flows, why would they care about current earnings? a. Net income provides an

5. If investors are truly interested in knowing a companys future cash flows, why would they care about current earnings?

a. Net income provides an estimate of sustainable annualized long-run future free cash flows.

b. Accruals and deferrals imitate the lumpiness inherent in year-to-year cash flows.

c. Investors are better able to predict a companys future free cash flows using accrual earnings than by using realized cash flows.

d. All of the above.

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