Are Cashflows Better Stock Return Predictors than Profits?

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Source: CFA Institute

38:16, video webcast, recorded on 21 June 2017
Posted on 12 July 2017

Steve Foerster, CFA, is a Professor of Finance at Ivey Business School, Western University, in London, Ontario, Canada. He received a BA (honors business administration) from Western University, an MA and PhD from the Wharton School, University of Pennsylvania and is a CFA ® charterholder.

Steve has over 50 publications including empirical studies in leading academic and practitioner-oriented publications such as Journal of Financial Economics, Journal of Finance, and CFA Institute Financial Analysts Journal ®. Steve has also won numerous teaching awards and has written over 100 case studies and technical notes.

Steve is on the editorial board of CFA Institute Financial Analysts Journal ®. His most recent book is Financial Management: Concepts and Applications.

This information is accurate as of the date of recording.   


Although various income statement–based measures predict the cross section of stock returns, direct method cash flow measures have even stronger predictive power. 

In the article “Are Cash Flows Better Stock Return Predictors Than Profits?”, Steve Foerster, CFA, explained how he transformed indirect method cash flow statements into disaggregated and more direct estimates of cash flows from operations and other sources to form portfolios on the basis of these measures. 

This is an archived version of a live webinar hosted by CFA Society United Kingdom on 21 June 2017. 
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