Furthermore, being profitable is also measured by an increasing trend of profitability. Firms that exhibit a growing trend of profits are more likely to achieve higher future returns. Even if the firms have negative ROA (losses) in the previous fiscal period, but if they show an improving trend, they are potentially more likely to be profitable in the future. Therefore, a binary score for ΔROA (bΔROA) equals 1 if a ΔROA is positive, 0 otherwise. CFROA is defined as a firm’s cash flows from operations divided by total assets. Since analysts generally use operating cash flows to predict firm’s financial position, in addition to earnings, a binary score for CFROA (bCFROA) equals 1 if a firm’s CFROA is greater than industry-median CFROA and 0 otherwise