This study examines the effect of firm life cycle on the relation between current profitability and future profitability. We employ ROE(return on equity) at t as current profitability ROE at t+1 as future profitability. We decompose ROE into three components such as ROS (return on sales), ATO(assets turnover), and LEV(financial leverage). And then we test the impact of firm life cycle on the association between ROE three components and future profitability. In addition, we investigate whether value relevances of ROE and ROE components vary with firm life cycle. We classify firm life cycle into three categories- growth stage, maturity stage and decline stage. We analyze 9,036 firm-years over the 1992∼2007 period. Empirical results are summarized as follows: First, the usefulness of ROE and its components in predicting future profitability varies with firm life cycle. Second, the usefulness of current profitability at growth stage is lower than that at maturity stage, while the usefulness at decline stage is higher than that at maturity stage. Third, at growth stage, information about capital investments is less important than that at maturity stage, while information about debt financing is more important than that at maturity stage. Fourth, value relevances of ROE and its components vary with firm life cycle. Fifth, value relevance of ROE is relatively low at growth stage, and relatively high at decline stage. Sixth, ROS is less value relevant at growth stage than at maturity stage, while LEV at growth stage is more value relevant than those at maturity stage. Seventh, ROS and LEV at decline stage all more value relevant than those at maturity stage. Based on these results, we make the following inferences. First, current profitability at growth stage is viewed as a noisy indicator of future profitability and having less value relevance. This is because firms at growth stage pursue differentiation strategy so that they spend on advertising and promotions, R&D and capital investments, depressing the level of current income to a great extent. Second, current profitability at decline stage, however, plays more important role in predicting future profits and valuing firms than that at maturity stage. This is because the cost structure at decline stage is quite stable so that current profitability is useful in predicting profits and conducting valuation. Third, information about assets turnover at growth stage is relatively less useful in predicting future profits than that at maturity stage. Managers planning to use resources in efficient ways is far from the realization of profit at growth stage. Fourth, the financial leverage information at decline stage has more usefulness in profit predictability and value relevance than that at maturity stage. It appears that firms’ decision to retire or refinance their existing debts at decline stage is critical in understanding whether they pursue cost saving strategies or enter into new projects. We can discuss the contribution of this study in terms of five aspects. First, this study extends the usefulness of accounting information to the area previously unexplored by providing empirical evidence that earnings predictability and value relevance of ROE and its components vary with firm life cycle. Second, the results of this study can be used in the classroom to demonstrate the interaction of firm life cycle with competitive strategy, investment/financing policies, and expenditures on R&D and advertising, which is well discussed in the textbook of financial statement analysis. Third, the results of this study can convey important messages to managers, analysts, and regulators. For example, managers at growth stage don’t have to too much worry about the current performance indicator to the extent that market participants put less weight on it in valuing growing firms. The basic premise of this paper is that the uncertainty about firms and the information asymmetry between managers and market participants differ across firm life cycle. Thus, it may be worthwhile to reexamine many of the accounting issues with the explicit consideration of firm life cycle. Examples include earnings management of IPO firms, accuracy of management forecasts, audit quality and auditor independence, and so on. We believe that firm life cycle will be an important analytical tool in understanding firms’ strategy and interpreting accounting numbers in more refined contexts.