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rts B and C

rts B and C

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter16: Financial Statement Analysis
Section: Chapter Questions
Problem 2MAD
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Answer parts B and C

Lands' End b. Discuss which parties expensing of stock options. The following information is extracted from the annual report of Lands' End (in millions, except per share data): Year 5 Year 4 PROBLEM 2-12 Year 6 Relations between Year 7 Year 8 Income, Cash Flou, and Stock Price Year 9 $ 51.0 $30.6 $36.1 $43.7 Fiscal year $64.2 (26.9) $31.2 121.8 41.4 34.5 22.4 Net income 74.3 11.8 (16.1) (1.2) Cash from (used by) operations 75.7 0.03 (86.5) (74.6) Net cash flow 103.3 27.5 2.4 5.1 27.5 Free cash flow* 28.375 14.625 16.125 32.375 39.312 31.0 24.375 Market price per share (end of fiscal year) Common shares outstanding 30.1 32.4 33.7 34.8 35.9 "Defined as Cash flow from operations- Capital expenditures- Dividends. Required: msiad Moemetsa 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 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? (3) Net cash flow per share and market price per share CHECK EPS performs best (4) Free cash flow per share and market price per share EGO
Transcribed Image Text:Lands' End b. Discuss which parties expensing of stock options. The following information is extracted from the annual report of Lands' End (in millions, except per share data): Year 5 Year 4 PROBLEM 2-12 Year 6 Relations between Year 7 Year 8 Income, Cash Flou, and Stock Price Year 9 $ 51.0 $30.6 $36.1 $43.7 Fiscal year $64.2 (26.9) $31.2 121.8 41.4 34.5 22.4 Net income 74.3 11.8 (16.1) (1.2) Cash from (used by) operations 75.7 0.03 (86.5) (74.6) Net cash flow 103.3 27.5 2.4 5.1 27.5 Free cash flow* 28.375 14.625 16.125 32.375 39.312 31.0 24.375 Market price per share (end of fiscal year) Common shares outstanding 30.1 32.4 33.7 34.8 35.9 "Defined as Cash flow from operations- Capital expenditures- Dividends. Required: msiad Moemetsa 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 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? (3) Net cash flow per share and market price per share CHECK EPS performs best (4) Free cash flow per share and market price per share EGO
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