The latest Statement of Financial Accounting Concepts (Number eight) reiterates the objective of financial reporting in the following terms: “Decisions by existing and potential investors … and … existing and potential lenders … depend on their assessment of the amount, timing, and uncertainty of (the prospects for) future net cash flows …” (p. 1-2, par. OB3). This orientation suggests that profitability and return on investment depends on future net cash flows. However, recent literature suggests the opposite; i.e., future net cash flows depend on profitability as measured, for example, by return to all investors (ROIC) or, equivalently, return on net operating assets (RNOA). Given the growing popularity of the earnings-based valuation model, it seems to me that a stronger conceptual framework would focus on providing information useful in assessing the amount, timing and uncertainty of future ROIC. Free cash flow comes from ROIC, not the other way around. In addition, relevance might be better gauged in terms of both decisions about the value of the entity and decisions regarding contracts between the firm and its employees. Any thoughts?