valuing business
The earnings minus expenditures calculus is clouded by accounting conventions.
Some costs aren't allowed to be taken as expenses immediately, and are required to be amortized across some period like the useful life of an asset (like Apple's OS development outlays, which have a bunch of amortization) or the duration of a contract (like the iPhone), so the "earnings" Apple claims may not be the same as cash in less cash out.
Also, a sale over time might be booked as earnings right now, with unpaid amounts on a note listed as a negative asset whose value declines as it's repaid.
What Wu alleges is that as earnings become more severely impacted by accounting conventions, one might want just to look at cash flow.
If Apple were using its liquid worth like SHLD does, cash flow might not help, either, but so far Apple hasn't done anything interesting with it.
Take care,
--Tex.