Question
The following information is extracted from the annual report of Lands End (in millions, except per share data): Fiscal year Year 9 Year 8 Year
The following information is extracted from the annual report of Lands End (in millions, except per share data): Fiscal year Year 9 Year 8 Year 7 Year 6 Year 5 Year 4 Net income $31.2 $64.2 $ 51.0 $30.6 $36.1 $43.7 Cash from (used by) operations 74.3 (26.9) 121.8 41.4 34.5 22.4 Net cash flow 0.03 (86.5) 75.7 11.8 (16.1) (1.2) Free cash flow* 27.5 (74.6) 103.3 27.5 2.4 5.1 Market price per share (end of fiscal year) 32.375 39.312 28.375 14.625 16.125 24.375 Common shares outstanding 30.1 31.0 32.4 33.7 34.8 35.9 *Defined as Cash flow from operations " Capital expenditures " Dividends. Required: a. Calculate and graph the following separate relations: (1) Net income per share (EPS) and market (3) Net cash flow per share and market price per share price per share (2) Cash from operations per share and market (4) Free cash flow per share and market price per share price per share CHECK EPS performs best 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. c. Choose another company and prepare similar graphs. Do your observations from Lands End generalize?
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