Discuss the relationship between profits and share price

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Question: Applying a relevant accounting theory, discuss the relationship between profits and share price in the context of the following excerpt from The Guardian newspaper on 20 March 2020:

"WH Smith has become the latest company to issue a profit warning because of the coronavirus pandemic, which has led to a major drop in shoppers at its airport outlets. The retailer's shares dropped 15% to £13.39 as it warned that the virus outbreak would cost it up to £130m in lost revenues. It said annual profits were likely to be £30m-£40m lower than previously expected. This in effect halves its profit forecast of nearly £80m."

Reference no: EM133328151

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