The financial statements for Nike, Inc., are presented in Appendix C at the end of the text. Use the following additional information (in millions): Accounts receivable at May 31, 2016 $ 3,241 Inventories at May 31, 2016 4,838 Total assets at May 31, 2016 21,379 Stockholders’ equity at May 31, 2016 12,258 Instructions Determine the following measures for the fiscal years ended May 31, 2018, and May 31, 2017. Round ratios and percentages to one decimal place. H. Ratio of liabilities to stockholders’ equity

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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17-8i Nike, Inc., Problem

Financial Statement Analysis

The financial statements for Nike, Inc., are presented in Appendix C at the end of the text. Use the following additional information (in millions):

Accounts receivable at May 31, 2016

$ 3,241

Inventories at May 31, 2016

4,838

Total assets at May 31, 2016

21,379

Stockholders’ equity at May 31, 2016

12,258

Instructions

  1. Determine the following measures for the fiscal years ended May 31, 2018, and May 31, 2017. Round ratios and percentages to one decimal place.

    H. Ratio of liabilities to stockholders’ equity
NIKE, Inc. Consolidated Statements of Income
Year Ended May 31.
(in millions, except per share data)
2018
2017
2016
Revenues
36,397 S
34,350 S
32,376
Cost of sales
Gross profit
20,441
19.038
17.405
15.956
15,312
14,971
Demand creation expense
3,577
3.341
3.278
Operating overhead expense
7.934
7.222
7.191
Total seling and administrative expense
11,511
10.563
10.409
Interest expense (income), net
54
59
19
Other expense (income), net
66
(196)
(140)
Income before income taxes
4,325
4.00
4,623
Income tax expense
2.392
NET INCOME
1,933
4,240
S
3,760
Eamings per common share
Basic
1.19
2.50
221
Diuted
1.17 S
%24
251 S
2.16
Dividends deciared per common share
0.78 $
0.70
0.62
S
The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement.
NIKE, Inc. Consolidated Statements of Comprehensive Income
Year Ended May 31.
(in millions)
2018
2017
2016
Net income
1.933 S
4.240 S
3.760
Other comprehensive income (loss), net of tax
Change in net foreign currency translation adjustment
(6)
16
(176)
Change in net gains (losses) on cash flow hedges
76
(S15)
(757)
Change in net gains dosses) on other
34
(32)
Total other comprehensive income (loss), net of tax
104
(531)
(920)
TOTAL COMPREHENSIVE INCcOME
2.037
S
3,709 S
2,832
The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement.
NIKE, Inc. Consolidated Balance Sheets
May 31,
n miions)
2018
2017
ASSETS
Curent assets:
Cash and equivalents
Short term investments
4,249
S
3,808
2.371
Accounts receivable, net
3498
3677
Inventories
5,201
5.055
Prepaid expenses and oher ourrent assets
1,130
1.150
Total current assets
15.134
16.061
Property. plant and equipment, net
4,454
dentitable intangite assets, net
285
283
Goodwi
154
139
Deferred inoome taxes and other assets
TOTAL ASSETS
2.509
2.787
22.536
23.259
LIABILITIES AND SHAREHOLDERS EQUITY
Curent abities
Current portion of long-term dobt
Notes payable
336
325
Accounts payable
2.279
2.048
Accrued abites
3,209
3,011
Income taxes payable
150
84
Total current liabilitien
G.040
5474
Longterm debt
3,468
3471
Deferred income taxes and cther labilities
3.216
1,907
Commitments and contingencies (Note 15)
Redeemable preferred stock
Shareholders equity
Common stock at stated value:
Ciass A convertible-329 and 329 shares outstanding
Class B-1,272 and 1314 shares outstanding
a
Capital in excess of stated value
5710
Accumulated other comprehensive loss
(92)
G13)
Retained eanings
3.517
6.907
Total shareholders equity
9812
12.407
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
22.536
23.259
The accompanying Notes to the Consolidated Financial Statements are an integral part of this atatement
Transcribed Image Text:NIKE, Inc. Consolidated Statements of Income Year Ended May 31. (in millions, except per share data) 2018 2017 2016 Revenues 36,397 S 34,350 S 32,376 Cost of sales Gross profit 20,441 19.038 17.405 15.956 15,312 14,971 Demand creation expense 3,577 3.341 3.278 Operating overhead expense 7.934 7.222 7.191 Total seling and administrative expense 11,511 10.563 10.409 Interest expense (income), net 54 59 19 Other expense (income), net 66 (196) (140) Income before income taxes 4,325 4.00 4,623 Income tax expense 2.392 NET INCOME 1,933 4,240 S 3,760 Eamings per common share Basic 1.19 2.50 221 Diuted 1.17 S %24 251 S 2.16 Dividends deciared per common share 0.78 $ 0.70 0.62 S The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. NIKE, Inc. Consolidated Statements of Comprehensive Income Year Ended May 31. (in millions) 2018 2017 2016 Net income 1.933 S 4.240 S 3.760 Other comprehensive income (loss), net of tax Change in net foreign currency translation adjustment (6) 16 (176) Change in net gains (losses) on cash flow hedges 76 (S15) (757) Change in net gains dosses) on other 34 (32) Total other comprehensive income (loss), net of tax 104 (531) (920) TOTAL COMPREHENSIVE INCcOME 2.037 S 3,709 S 2,832 The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. NIKE, Inc. Consolidated Balance Sheets May 31, n miions) 2018 2017 ASSETS Curent assets: Cash and equivalents Short term investments 4,249 S 3,808 2.371 Accounts receivable, net 3498 3677 Inventories 5,201 5.055 Prepaid expenses and oher ourrent assets 1,130 1.150 Total current assets 15.134 16.061 Property. plant and equipment, net 4,454 dentitable intangite assets, net 285 283 Goodwi 154 139 Deferred inoome taxes and other assets TOTAL ASSETS 2.509 2.787 22.536 23.259 LIABILITIES AND SHAREHOLDERS EQUITY Curent abities Current portion of long-term dobt Notes payable 336 325 Accounts payable 2.279 2.048 Accrued abites 3,209 3,011 Income taxes payable 150 84 Total current liabilitien G.040 5474 Longterm debt 3,468 3471 Deferred income taxes and cther labilities 3.216 1,907 Commitments and contingencies (Note 15) Redeemable preferred stock Shareholders equity Common stock at stated value: Ciass A convertible-329 and 329 shares outstanding Class B-1,272 and 1314 shares outstanding a Capital in excess of stated value 5710 Accumulated other comprehensive loss (92) G13) Retained eanings 3.517 6.907 Total shareholders equity 9812 12.407 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 22.536 23.259 The accompanying Notes to the Consolidated Financial Statements are an integral part of this atatement
NIKE, Inc. Consolidated Statements of Cash Flows
Year Ended May 31.
(in milions)
2018
2017
2016
Cash provided by operations
Net income
1.933
S
4,240
3.700
Adjustments to reconcile net income to net cash provided by operations:
Depreciation
747
706
649
Deferred income taxes
G47
(273)
(80)
Stock-based compensation
218
215
236
Amortization and other
27
10
13
Not foreign curency adjustments
(99)
(117)
Changes in certain working capital components and other assets and labiities:
Decrease (increase) in accounts receivable
187
(426)
60
(Increase) in inventories
(255)
(231)
(590)
Decrease (increase) in prepaid expenses and other current and non-current assets
35
(120)
(161)
Increase (decrease) in accounts payatle, acorued labilities and other current and non-curent labilites
1.515
(158)
(506)
Cash provided by operations
4.955
3.846
3.399
Cash provided (used) by investing activities:
Purchases of short-term investments
(4.783)
(5,928)
(5,367)
Maturities of short-term investments
3.613
3,623
2.924
Sales of short-term investments
2.496
2.423
2.386
Investments in reverse repurchase agreements
150
Additions to property, plant and equipment
(1.028)
(1.105)
(1,143)
Disposals of property, plant and equipment
3
13
10
Other investing activities
(25)
(34)
Cash provided (used) by investing activities
276
(1,008)
(1,034)
Cash used by financing activities:
Net proceeds from long-term debt issuance
1,482
981
Long-term debt payments, including current portion
(6)
(44)
(106)
Increase (decrease) in notes payable
13
327
(67)
Payments on capital lease and other financing obligations
(23)
(17)
Proceeds from exercise of stock options and other stock issuances
733
489
607
Repurchase of common stock
(4.254)
a.223)
3.238)
Dividends- common and preferred
(1,243)
(1,133)
(1,022)
Tax payments for net share settiement of equity awards
(55)
(20)
(22)
Cash used by financing activities
(4,835)
(2.148)
2.074)
Effect of exchange rate changes on cash and equivalents
45
(20)
(105)
Net increase (decrease) in cash and equlvalents
441
670
(714)
Cash and equivalents. beginning of year
CASH AND EQUIVALENTS, END OF YrEAR
3.808
3,138
3652
4,249 S
3,008
3,138
Supplemental disciosure of cash flow information:
Cash paid during the year for:
Interest, net of capitalized interest
125
98
70
Income taxes
529
703
748
Non-cash additions to property. plant and equipment
294
266
252
Dividends declared and not paid
320
300
271
The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement.
NIKE, Inc. Consolidated Statements of Shareholders' Equity
Commen Steck
Capitat n
Accumutated
Cless A
Glass
Shares Amunt
whensive
Retained
nge
7.203 12,707
m er sr ta
Rhares
comprenm
Farninu
Amunt
Tatal
malanee at May 31, 20s
a
1,24
Snock ootiona exerciaed
Comversn Cha n Cem R
Repurchase of Cass Common Sock
Dividends an
(10)
d terd (S
ahare)
euance
(1.0sa
(1.05a)
nptoyees net or
sos
moca-Dsea comeosaton
Net income
O compret on
atance atMay 31, 2010
3.760
3.760
31
. 3 12.350
1,329
Snoc opiona exercised
17
sas
Comverson te Class Common o
(24)
24
Repurchaseof Clas Common Sock
Dividends on common atock o.ro per
and preferred
(1.1
(1.1
5)
y n or
shares wthheld
o a a compensation
121
(13)
100
215
215
Net income
4.240
4.240
Cer comereteve eot
matane at May 31, 2017
Sno opona exercd
ww
(213)
1314
24
G00
Conversion so Clann Common sinock
(4.013)
Repurchase of Cas Common Snock
Dividenda on common atock
share) and preterred
nare
Uance
shares
c254)
(4.207)
(1.205)
yees.net of
e
218
218
Net
Oer compretevece os
Kelassatisre a gs
cordance wh AU 201O-02
Balance et My 31, 2018
1aa
104
17
(17)
3.517 S 0.12
329 -
1,272
6.384
e92)
Te yng Can nt narr nte s are an dgral part tte
Transcribed Image Text:NIKE, Inc. Consolidated Statements of Cash Flows Year Ended May 31. (in milions) 2018 2017 2016 Cash provided by operations Net income 1.933 S 4,240 3.700 Adjustments to reconcile net income to net cash provided by operations: Depreciation 747 706 649 Deferred income taxes G47 (273) (80) Stock-based compensation 218 215 236 Amortization and other 27 10 13 Not foreign curency adjustments (99) (117) Changes in certain working capital components and other assets and labiities: Decrease (increase) in accounts receivable 187 (426) 60 (Increase) in inventories (255) (231) (590) Decrease (increase) in prepaid expenses and other current and non-current assets 35 (120) (161) Increase (decrease) in accounts payatle, acorued labilities and other current and non-curent labilites 1.515 (158) (506) Cash provided by operations 4.955 3.846 3.399 Cash provided (used) by investing activities: Purchases of short-term investments (4.783) (5,928) (5,367) Maturities of short-term investments 3.613 3,623 2.924 Sales of short-term investments 2.496 2.423 2.386 Investments in reverse repurchase agreements 150 Additions to property, plant and equipment (1.028) (1.105) (1,143) Disposals of property, plant and equipment 3 13 10 Other investing activities (25) (34) Cash provided (used) by investing activities 276 (1,008) (1,034) Cash used by financing activities: Net proceeds from long-term debt issuance 1,482 981 Long-term debt payments, including current portion (6) (44) (106) Increase (decrease) in notes payable 13 327 (67) Payments on capital lease and other financing obligations (23) (17) Proceeds from exercise of stock options and other stock issuances 733 489 607 Repurchase of common stock (4.254) a.223) 3.238) Dividends- common and preferred (1,243) (1,133) (1,022) Tax payments for net share settiement of equity awards (55) (20) (22) Cash used by financing activities (4,835) (2.148) 2.074) Effect of exchange rate changes on cash and equivalents 45 (20) (105) Net increase (decrease) in cash and equlvalents 441 670 (714) Cash and equivalents. beginning of year CASH AND EQUIVALENTS, END OF YrEAR 3.808 3,138 3652 4,249 S 3,008 3,138 Supplemental disciosure of cash flow information: Cash paid during the year for: Interest, net of capitalized interest 125 98 70 Income taxes 529 703 748 Non-cash additions to property. plant and equipment 294 266 252 Dividends declared and not paid 320 300 271 The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. NIKE, Inc. Consolidated Statements of Shareholders' Equity Commen Steck Capitat n Accumutated Cless A Glass Shares Amunt whensive Retained nge 7.203 12,707 m er sr ta Rhares comprenm Farninu Amunt Tatal malanee at May 31, 20s a 1,24 Snock ootiona exerciaed Comversn Cha n Cem R Repurchase of Cass Common Sock Dividends an (10) d terd (S ahare) euance (1.0sa (1.05a) nptoyees net or sos moca-Dsea comeosaton Net income O compret on atance atMay 31, 2010 3.760 3.760 31 . 3 12.350 1,329 Snoc opiona exercised 17 sas Comverson te Class Common o (24) 24 Repurchaseof Clas Common Sock Dividends on common atock o.ro per and preferred (1.1 (1.1 5) y n or shares wthheld o a a compensation 121 (13) 100 215 215 Net income 4.240 4.240 Cer comereteve eot matane at May 31, 2017 Sno opona exercd ww (213) 1314 24 G00 Conversion so Clann Common sinock (4.013) Repurchase of Cas Common Snock Dividenda on common atock share) and preterred nare Uance shares c254) (4.207) (1.205) yees.net of e 218 218 Net Oer compretevece os Kelassatisre a gs cordance wh AU 201O-02 Balance et My 31, 2018 1aa 104 17 (17) 3.517 S 0.12 329 - 1,272 6.384 e92) Te yng Can nt narr nte s are an dgral part tte
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