The panel below reports cash flows and earnings for

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The panel below reports cash flows and earnings for Wal-Mart from 1988 to 1996 (in millions of dollars, except per share numbers):

  1988 1989 1990 1991 1992 1993 1994 1995 1996
Cash from operations 536 828 968 1,422 1,553 1,540 2,573 3,410 2,993
Cash investments 627 541 894 1,526 2,150 3,506 4,486 3,792 3,332
Free cash flow (91) 287 74 (104) (597) (1,966) (1,913) (382) (339)
Net Income 628 837 1,076 1,291 1,608 1,995 2,333 2,681 2,740
EPS 0.28 0.37 0.48 0.57 0.70 0.87 1.02 1.17 1.19

What can you tell from the EPS data? Perform a horizontal analysis to support your view.

What is the definition of free cash flow? How do we use free cash flow in financial statement analysis?

Why would Wal-Mart have such negative free cash flows? 

What explains the difference between Wal-Mart's cash flows and earnings? Any implications for Wal-Mart's financial position and performance?

Reference no: EM13454158

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