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Using Operating Cash Flow to Detect Earnings Problems

"The relationship between earnings growth, more specifically,growth in income from continuing operations, and increases in operating cash flow is important and can provide meaningful insight into a company’s financial health. Over extended periods, the rate of growth in earnings should be commensurate with the rate of growth in operating cash flow.A lasting discrepancy in their rates of growth should be investigated in order to gain an understanding of its causes and implications..."
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Source: Accounting, Financial & Taxation Blog

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