Abstract :
The purpose of this research is to test the ability of earnings and cash flow in predicting future cash flows. Samples of this study consist of manufacturing companies from automotive and allied products Industry which is listed in BEI from year 2003-2007
The sample cover 15 companies which are selected by using purposive sampling method for automotive and allied products companies populations. This research use average total aset as deflator to eliminate size effect. The hypothesis is tested by multiple regression
The result of this research shows that there is a positive correlation and significant effect of those independent variabel (earning and cash flow) to dependent variabel (future cash flow). The result of this study supported the proposed hypothesis that earnings and cash flow have ability to predict future cash flow.
Keywords : Earnings, cash flow, and future cash flow