Cash Flow and Free Cash Flow Analysis – U7
June 4th, 2022
From:
Textbook Information
Title: Financial Statement Analysis, 10th edition
Author: K.R. Subramanyam and John J. Wild
Physical Text ISBN: 978-0-07-337943-2
Publisher: McGraw Hill
Case Number: 7.1
Required:
- a. Lands’ End recently implemented a strategy of filling nearly all orders when the order is placed. In what year do you believe the company implemented this strategy and how is the strategy reflected in the information contained in the statement of cash flows?
- b. Explain how the following items reconcile net income to net cash flows from operating activities:
- (1) Depreciation
- (2) Receivables
- (3) Inventory
- (4) Reserve for returns
- c. Calculate free cash flows for each year shown.
CHECK
(c) Yr 9, $27,510
- d. How does Lands’ End use its free cash flow? Do you think its use of free cash flows reflects good financial strategy?