Effect of Cash and Accrual Components of Earnings on the Future Profitability

Fuzzy regression analysis has been an extension of the classical regression analysis that has used in evaluating the functional relationship between the independent and dependent variables in a fuzzy environment. Accounting profit is the most important information used by decision makers in the economic analysis. This research investigated the effect of cash and accrual components of earnings in listed company's Tehran Stock exchange by fuzzy regression during 2007 and 2011. For this aim, in the research earning was divided into cash and accrual components, and cash components were included: cash held in company, net payments (receipts) to (from) shareholders and net payments (receipts) to (from) creditors. Likewise, accrual components consist of two parts: Discretionary accrual and nondiscretionary accruals and the relationship of each component tested with earnings the next year. Test results show that among the components of profit, component of cash and among the components of cash, cash held in the company will predict earnings of the future more than the other components.