This case is based on the Foot Locker, Inc., consolidated financial statements in Appendix B at the end of this book.

1. Foot Locker, Inc.’s consolidated statements of operations report only one special item.

What is it, and what' is its amount for 2007?

2. What is your evaluation of the quality of Foot Locker, Inc.’s earnings? State how you formed your opinion.

3. At the end of 2006, how much would you have been willing to pay for one share of Foot Locker, Inc.’s stock if you had rated the investment as high risk? As low risk? Use even numbered investment capitalization rates in the range of 4% 10% for your analysis, and use basic earnings per share for continuing operations.

4. Go to Foot Locker, Inc.’s Web site and get the current price of a share of its common stock. Which value that you estimated in Requirement 2 is closest to the company’s actual stock price? (Challenge)