Free Cash Flow Of The Listed Companies And The Continued Viability Of The Relationship Between Empirical Research

The ability of Lasting Management is significant to the operating and decision-making of the listed company, there are two ways to evaluate the ability of lasting management :to choose book earning or free cash flow evaluate ability of lasting management .From this academic perspective , we explore in this dissertation how to objectively measure the profitability of China's listed companies.As usual as in the most countries, China's financial accounting system is based on accrual system. Under accrual system, book earning and operating cash flow is different .Given that management can chose different accounting policies within legal framework, a company's book earning are prone to be adjusted or rigged by its top executives, which may mislead investors in assessing the company's real return. To choose free cash flow as the objective is a good way to solve the problem. What cash flows from operating activities minus capitalized expense is free cash flow. There is no any effect on the development of enterprise if the cash flows are totally used. Therefore, free cash flow is very important for an enterprise to measure the achievement of management. So the thesis proposes that the prediction and analysis of free cash flow are the main contents about free cash flow in use, based on the abroad research, suggest introducing free cash flow index to replace the ordinary profitability index of financial accounting, and put forward the hypothesis about free cash flow and lasting management, use the free cash flow index and ordinary profitability index of financial accounting do a positive research to the enginery, spin, pharmacy listed company, then make the judgment of the ability of the listed company.