Wal-Mart has been the most successful retailer in history. The panel below reports cash flows and earnings for the firm from 1988 to 1996 (in millions of dollars, except per-share numbers):

The cash flows are unlevered cash flows.
a. Why would such a profitable firm have such negative free cash flows?
b. What explains the difference between Wal-Mart€™s cash flows and earnings?
c. Is this a good firm to apply discounted cash flow analysisto?

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1988 1939 1990 1991 1992 1993 1994 95 1996 Cash from operations 36 828 96 1,422 1553 540 2,573 3410 2,993 Cash investments 62 541 894 1526 2.150 3506 4486 3,792 3332 Free cash fow 287 74 (04) (597) (966) (1913 32) (339) free cash fow Net income 74 09 1966 1.913) 3) 39 528 837 1,076 ,291 1,60B 1,995 2,333 2,681 2,740 028 D37 048 0.57 0.70 087 .17 1.19 EPS