Smoothing Profit Role in Forecasting Future Profitability Companies

The reported profit is of important fiscal information to be considered during decisions. Fiscal analyzers generally consider the reported profit as an important factor in their considerations and judgments. Also the investors depend on the fiscal information in the fiscal statements of economic departments specially the reported profit when they decide about investment. The investors believe that fixed profit compared to fluctuated profit guarantees higher divisible profit payment. Also the profit fluctuations are considered as important criterion for risk by company and the companies with more smoothed profit have less risk. So the companies with more smoothed profit are more interesting for investors and are considered more appropriate to their investments.