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economic returns are at the basis of dividend growth and value creation. The Residual  Income Model (RIM hereafter) makes this possible.  \subsection{Linking the \textit{RIM} with the \textit{DDM}}  The RIM developed by Ohlson and Felthman (1995) assumes an accounting identity, the  clean surplus rule1 , which states that the change in book value is equal to the difference  between earnings and dividends $B_{t}-B_{t-1}=E_{t}-D_{t}$.Earnings that are not distributed  to investors are reinvested in the company. It then appears obvious that if a company’s  economic profitability is better than what shareholders expect, the company has an incentive  to reinvest profits in order to generate even bigger future earnings and dividends. Residual  income, or abnormal earnings, is constructed as the di.erence between accounting earnings  and the previous-period book value mutliplied by the cost of equity (i.e. the cost of equity  being what investors expect as future returns) $A_{t}=E_{t}-RB_{t-1}$. Using these accounting  identities allows us to rewrite dividends as $D_{t}=B_{t-1}(1+R)-B_{t}+A_{t}$. Replacing $D_{t}$ with  this new expression into the \textit{DDM} formula (2) and operating some simplifications leads to  the following \textit{RIM} equation :  2  $EV_{t}=\displaystyle\sum_{i=t+1}^{t+K}\frac{FCFF_i}{(1+R)^i}+EV_{t+K}$  $P_{t}=\displaystyle\sum_{i=1}^{\infty}\frac{D_{t+i}}{(1+R)^i}\approx\frac{D_{1}}{R-g}$  $B_{t}-B_{t-1}=E_{t}-D_{t}$  $B_{t}=E_{t}-RB_{t-1}$  This should allow to contourner caveats of earnings/dividends valuation model. We build a new Profitability/Valuation framework that hinges on the cash-flows a firm is able to generate. Using cash-flows allows to neutralize the leverage effect at the operating level of a firm as well as the balance sheet level. The paper is organized as follow. As a means of introduction we remind the basic principles behind asset valuation and show how they can be translated into equity valuation models. In the first section, we give a brief description of the links between the \textit{DDM}, the \textit{RIM} and the \textit{PB-ROE} framework. We also show how the \textit{PB-ROE} framework can be used as a screening tool for equity investors. In the second section, we show how we can build a new Profitability/Valuation framework based on a firm's cash-flows instead of a firms earnings. the deals with accounting relationship.