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Cited by 1,551

The DOI matches its Crossref record.

The relation between earnings and cash flows

Open access
Dechow, Patricia M., Kothari, S.P., L. Watts, Ross·1998·Journal of Accounting and Economics
DOI 10.1016/s0165-4101(98)00020-2
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Abstract

A model of earnings, cash flows and accruals is developed assuming a random walk sales process, variable and fixed costs, and that the only accruals are accounts receivable and payable, and inventory. The model implies earnings better predict future operating cash flows than current operating cash flows and the difference varies with the operating cash cycle. Also, the model is used to predict serial and cross-correlations of each firm's series. The implications and predictions are tested on a 1337 firm sample over 1963–1992. Both earnings and cash flow forecast implications and correlation predictions are generally consistent with the data.

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Metadata

Authors
Dechow, P. M., Kothari, S. P., & L. Watts, R.
Venue
Journal of Accounting and Economics
Publisher
Elsevier BV
Published
1998-05
Volume
25
Issue
2
Pages
133-168
ISSN
0165-4101 (ISSN-L)
DOI
10.1016/s0165-4101(98)00020-2
OpenAlex
W2074531150
Cited by
1,551
References
0
FWCI
39.45
Type
journal article
Language
en
Open access
hybrid

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CoChat. (2026). Citation check: The relation between earnings and cash flows. https://app.cochat.ai/papers/10.1016/s0165-4101(98)00020-2
The paper
Dechow, P. M., Kothari, S. P., & L. Watts, R. (1998). The relation between earnings and cash flows. Journal of Accounting and Economics. https://doi.org/10.1016/s0165-4101(98)00020-2

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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).

Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.