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Financial statement analysis The financial statements for Nike, Inc., are presented in Appendix D at the end of the text. Use the following additional information (in thousands): Accounts receivable at May 31, 2014 $ 3,117 Inventories at May 31, 2014 4,142 Total assets at May 31, 2014 18,594 Stockholders' equity at May 31, 2014 12,000

Financial statement analysis The financial statements for Nike, Inc., are presented in Appendix D at the end of the text. Use the following additional information (in thousands): Accounts receivable at May 31, 2014 $ 3,117 Inventories at May 31, 2014 4,142 Total assets at May 31, 2014 18,594 Stockholders' equity at May 31, 2014 12,000

Corporate Financial Accounting
Corporate Financial Accounting
14th Edition
ISBN:9781305653535
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter14: Financial Statement Analysis
Section: Chapter Questions
Problem 14.1FSA: Financial Statement Analysis The financial statements for Nike, Inc., are presented in Appendix 1 at...
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I need help with question 2. I did question 1 wich is the microsoft excel. I just need to do question 2 which ask what would be the conclusion drawn to the analyses. I attached the two problems and the microsoft excel. 

### Financial Statement Analysis for Nike, Inc. #### Problem Description: The financial statements for Nike, Inc., are presented in Appendix D at the end of the text. Use the following additional information (in thousands): - **Accounts receivable at May 31, 2014:** $3,117 - **Inventories at May 31, 2014:** $4,142 - **Total assets at May 31, 2014:** $18,594 - **Stockholders’ equity at May 31, 2014:** $12,000 #### Instructions: 1. Determine the following measures for the fiscal years ended May 31, 2016, and May 31, 2015. Round ratios and percentages to one decimal place. - a. **Working capital** - b. **Current ratio** - c. **Quick ratio** - d. **Accounts receivable turnover** - e. **Number of days' sales in receivables** - f. **Inventory turnover** - g. **Number of days' sales in inventory** - h. **Ratio of liabilities to stockholders' equity** - i. **Asset turnover** - j. **Return on total assets** - k. **Return on common stockholders' equity** - l. **Price-earnings ratio**, assuming that the market price was $54.90 per share on May 29, 2016, and $52.81 per share on May 30, 2015 - m. **Percentage relationship of net income to sales** 2. What conclusions can be drawn from these analyses? ### Explanation of Analytical Measures: 1. **Working Capital:** *Calculation of the difference between current assets and current liabilities.* 2. **Current Ratio:** *Measurement of a company's ability to pay short-term obligations, calculated by dividing current assets by current liabilities.* 3. **Quick Ratio:** *Assessment of a company's short-term liquidity, calculated by dividing liquid assets (excluding inventories) by current liabilities.* 4. **Accounts Receivable Turnover:** *Indication of how frequently a company collects its receivables in a period, calculated as net credit sales divided by average accounts receivable.* 5. **Number of Days' Sales in Receivables:** *Determination of the average number of days it takes to collect receivables
Transcribed Image Text:### Financial Statement Analysis for Nike, Inc. #### Problem Description: The financial statements for Nike, Inc., are presented in Appendix D at the end of the text. Use the following additional information (in thousands): - **Accounts receivable at May 31, 2014:** $3,117 - **Inventories at May 31, 2014:** $4,142 - **Total assets at May 31, 2014:** $18,594 - **Stockholders’ equity at May 31, 2014:** $12,000 #### Instructions: 1. Determine the following measures for the fiscal years ended May 31, 2016, and May 31, 2015. Round ratios and percentages to one decimal place. - a. **Working capital** - b. **Current ratio** - c. **Quick ratio** - d. **Accounts receivable turnover** - e. **Number of days' sales in receivables** - f. **Inventory turnover** - g. **Number of days' sales in inventory** - h. **Ratio of liabilities to stockholders' equity** - i. **Asset turnover** - j. **Return on total assets** - k. **Return on common stockholders' equity** - l. **Price-earnings ratio**, assuming that the market price was $54.90 per share on May 29, 2016, and $52.81 per share on May 30, 2015 - m. **Percentage relationship of net income to sales** 2. What conclusions can be drawn from these analyses? ### Explanation of Analytical Measures: 1. **Working Capital:** *Calculation of the difference between current assets and current liabilities.* 2. **Current Ratio:** *Measurement of a company's ability to pay short-term obligations, calculated by dividing current assets by current liabilities.* 3. **Quick Ratio:** *Assessment of a company's short-term liquidity, calculated by dividing liquid assets (excluding inventories) by current liabilities.* 4. **Accounts Receivable Turnover:** *Indication of how frequently a company collects its receivables in a period, calculated as net credit sales divided by average accounts receivable.* 5. **Number of Days' Sales in Receivables:** *Determination of the average number of days it takes to collect receivables
### Financial Ratios Analysis #### a. Working Capital **Working capital** is calculated using the formula: \[ \text{Working capital} = \text{Current assets} - \text{Current liabilities} \] | | 2016 | 2015 | |----------------------|-------|-------| | Current assets (a) | 15025 | 15587 | | Current liabilities (b) | 5358 | 6332 | | Working capital | 9667 | 9255 | #### b. Current Ratio **Current ratio** is calculated using the formula: \[ \text{Current ratio} = \frac{\text{Current assets}}{\text{Current liabilities}} \] | | 2016 | 2015 | |----------------|-------|-------| | Current assets (a) | 15025 | 15587 | | Current liabilities (b) | 5358 | 6332 | | Current ratio | 2.8 | 2.46 | #### c. Quick Ratio **Quick ratio** is calculated using the formula: \[ \text{Quick ratio} = \frac{\text{Current assets} - \text{Inventories}}{\text{Current liabilities}} \] | | 2016 | 2015 | |----------------|-------|-------| | Current assets (a) | 15025 | 15587 | | Inventories (d) | 4838 | 4327 | | Current liabilities (c) | 5358 | 6332 | | Quick ratio | 1.9 | 1.78 | #### d. Accounts Receivable Turnover Ratio **Accounts receivable turnover ratio** is calculated using the formula: \[ \text{Accounts receivable turnover ratio} = \frac{\text{Sales}}{\text{Average accounts receivable}} \] \[ \text{Average accounts receivable} = \frac{\text{Beg. Acc receivable} + \text{End. Acc. Receivable}}{2} \] | | 2016 | 2015 | |----------------------|-------|-------| | Revenues | 32376 | 30601 | | Beg. accounts receivable | 3358 | 3117 | | End. accounts receivable |
Transcribed Image Text:### Financial Ratios Analysis #### a. Working Capital **Working capital** is calculated using the formula: \[ \text{Working capital} = \text{Current assets} - \text{Current liabilities} \] | | 2016 | 2015 | |----------------------|-------|-------| | Current assets (a) | 15025 | 15587 | | Current liabilities (b) | 5358 | 6332 | | Working capital | 9667 | 9255 | #### b. Current Ratio **Current ratio** is calculated using the formula: \[ \text{Current ratio} = \frac{\text{Current assets}}{\text{Current liabilities}} \] | | 2016 | 2015 | |----------------|-------|-------| | Current assets (a) | 15025 | 15587 | | Current liabilities (b) | 5358 | 6332 | | Current ratio | 2.8 | 2.46 | #### c. Quick Ratio **Quick ratio** is calculated using the formula: \[ \text{Quick ratio} = \frac{\text{Current assets} - \text{Inventories}}{\text{Current liabilities}} \] | | 2016 | 2015 | |----------------|-------|-------| | Current assets (a) | 15025 | 15587 | | Inventories (d) | 4838 | 4327 | | Current liabilities (c) | 5358 | 6332 | | Quick ratio | 1.9 | 1.78 | #### d. Accounts Receivable Turnover Ratio **Accounts receivable turnover ratio** is calculated using the formula: \[ \text{Accounts receivable turnover ratio} = \frac{\text{Sales}}{\text{Average accounts receivable}} \] \[ \text{Average accounts receivable} = \frac{\text{Beg. Acc receivable} + \text{End. Acc. Receivable}}{2} \] | | 2016 | 2015 | |----------------------|-------|-------| | Revenues | 32376 | 30601 | | Beg. accounts receivable | 3358 | 3117 | | End. accounts receivable |
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