Compute the ratio of cash flow to net income

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Reference no: EM13900237

Estée Lauder Inc. is one of the world's leading manufacturers and marketers of skin care, makeup, and hair products. Estée Lauder products are sold in over 130 countries and territories under such brand names as Clinique, Rodan, Tommy Hilfiger, and Donna Karan. The following data (in thousands) were taken from the 10-K filings with the Securities and Exchange Commission for the years ending June 30, 2004 and 2003:

	2004	2003
Cash flow from operating activities	$667,300	$548,500
Net income	342,100	319,800

1. Compute the ratio of cash flow to net income for 2004 and 2003. Round to one decimal place.

2. In 2004, Estée Lauder reported a loss from discontinued operations of $33.3 million. Compute the ratio of cash flow to net income for 2004 taking into consideration the impact of the dis- continued operations on net income. Round to one decimal place.

3. Based upon (2), is the ratio of cash flow to net income comparable between 2004 and 2003?

Reference no: EM13900237

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