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Prior studies have attempted to confirm or reject the FASB's assertion in its Conceptual Framework that accrual accounting measures provide better information for predicting cash flows than do cash basis measures. However, their results proved largely inconclusive and contradictory. The current study identifies research constructs that may be driven these inconsistent findings and makes adjustments to mitigate their effects. Univariate cash flow prediction models are developed for companies in the petroleum industry using a continuum of predictor variables. In predicting operating cash flows, one variable, net earnings plus depreciation and amortization, consistently achieves superior results.
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