Earnings and Cash Flows

This segment has focused on earnings; when reporting earnings management has certain discretion over the treatment of gains, losses, and expenses.
Cash inflows and outflows can provide the analyst with a more objective view of the company's economic reality.
Analysts should compare trends in net income with trends in cash flow from operations and may be rightfully skeptical of firms that report trends in earnings growth which are not matched by similar trends in cash flows from operations.
Summary of cash flow treatment under GAAP and IFRS

ITEM	U.S. GAAP	IFRS
Interest Received	Operations	Operations or Investing
Interest Paid	Operations	Operations or Financing
Dividends Received	Operations	Operations or Investing
Dividends Paid	Financing	Operations or Financing
Taxed Paid	Operations	Operations, Investing or Financing

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