PROBLEM 2-12 Relations between Income, Cash Flow, and Stock Price Landas' End The following information is extracted from the annual report of Lands' End (in millions, except per share data) Fiscal year Net income Cash from (used by) operations Net cash flow Free cash flow Market price per share (end of fiscal yer) 32.375 39.312 Common shares outstanding Year9 Year 8 er Year6 Year 5 Year 4 $31.2 $642 $51.0 $30.6 $36.1 $43.7 743 26.9 121.8 414 34.5 224 757 118 16.1) (1.2) 0.03 5) 75 046) 103.3 275 2.4 28.375 14.625 16.125 24.375 3LO 32.4 33.7 34.835.9 Defined as Cash flow from operations- Captal expend toes-Dvidends CHECK EPS performs best Required a. Calculate and graph the following separate relations (1) Net income per share (EPS) and market price per share (2) Cash from operations per share and market price per share (3) Net cash flow per share and market price per share (4) Free cash flow per share and market price per share b. Which of the measures extracted from the annual report appear to best explain changes in stock price? Discuss the implications of this for stock valuation