It is difficult to overstate the importance of cash flow to overall corporate financial health. Our fundamental concepts of credit quality and valuation are based on projects of cash
flow. Many investors, burned by the trust they have placed in reported earnings in an era of questionable accounting have turned their focus to cash flow as the only trustworthy measure
of financial performance available. Yet, what has become disturbingly clear is that cash flow, and especially operating cash flow and free cash flow are not as trustworthy as many would
like to believe. Managers have discretion in the reporting of cash flow amounts and often use it to mislead financial statement users. In the book this practice is termed
creative cash flow reporting. The book identifies the more common steps employed to yield misleading cash flow amounts and demonstrates how to adjust and more effectively use the cash
flow statement in analysis.>
