3. Among the information that financial reporting provides, profit information which
represents the results of the entity’s investments is basically the results of the past,
but it is commonly used in predicting future cash flows, which provides the basis for
estimating the value of the entity. Use of profit information implies emphasis on
the information regarding stock of investments which generates profit. This is
because not only the absolute amount of the results of the entity’s investments but
also the profitability (or efficiency) in comparison with the stock amount of
investments which generates those results is considered to be important.