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NIKE,INC Financial Statement Analysis The financial statements for Nike, Inc., are presented in photos in the photos provided below. 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 1. Determine the following measures for the fiscal years ended May 31, 2018, and May 31, 2017. Assume 365 days a year. Do not round interim calculations. Round the working capital amount in part (a) to the nearest dollar. Round all other final answers to one decimal place. When required, use the rounded final answers in subsequent computations. May 31, 2018 May 31, 2017 QUESTION BELOW A-L With work shown for each letter PLEASE: As an explanation is needed.  a. Working capital (in millions) $ $ b. Current ratio c. Quick ratio d. Accounts receivable turnover e. Number of days' sales in receivables days days f. Inventory turnover g. Number of days' sales in inventory days days 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 $72.12 per share on May 29, 2018, and $53.06 per share on May 30, 2017.   2. The working capital ___________ between 2017 and 2018. The current and quick ratios both__________during 2018. The accounts receivable turnover_____________ and number of days’ sales in receivables _____________ slightly. The margin of protection to creditors ______________ . The return on total assets ______________ during 2018. The return on common stockholders’ equity ______________.

NIKE,INC Financial Statement Analysis The financial statements for Nike, Inc., are presented in photos in the photos provided below. 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 1. Determine the following measures for the fiscal years ended May 31, 2018, and May 31, 2017. Assume 365 days a year. Do not round interim calculations. Round the working capital amount in part (a) to the nearest dollar. Round all other final answers to one decimal place. When required, use the rounded final answers in subsequent computations. May 31, 2018 May 31, 2017 QUESTION BELOW A-L With work shown for each letter PLEASE: As an explanation is needed.  a. Working capital (in millions) $ $ b. Current ratio c. Quick ratio d. Accounts receivable turnover e. Number of days' sales in receivables days days f. Inventory turnover g. Number of days' sales in inventory days days 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 $72.12 per share on May 29, 2018, and $53.06 per share on May 30, 2017.   2. The working capital ___________ between 2017 and 2018. The current and quick ratios both__________during 2018. The accounts receivable turnover_____________ and number of days’ sales in receivables _____________ slightly. The margin of protection to creditors ______________ . The return on total assets ______________ during 2018. The return on common stockholders’ equity ______________.

FINANCIAL ACCOUNTING
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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NIKE,INC

Financial Statement Analysis


The financial statements for Nike, Inc., are presented in photos in the photos provided below.

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


1. Determine the following measures for the fiscal years ended May 31, 2018, and May 31, 2017.

Assume 365 days a year.

Do not round interim calculations.

Round the working capital amount in part (a) to the nearest dollar.


Round all other final answers to one decimal place.

When required, use the rounded final answers in subsequent computations.


May 31, 2018
May 31, 2017

QUESTION BELOW A-L With work shown for each letter PLEASE: As an explanation is needed. 
a. Working capital (in millions) $ $
b. Current ratio
c. Quick ratio
d. Accounts receivable turnover
e. Number of days' sales in receivables days days
f. Inventory turnover
g. Number of days' sales in inventory days days
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 $72.12 per share on May 29, 2018, and $53.06 per share on May 30, 2017.

 


2. The working capital ___________ between 2017 and 2018. The current and quick ratios both__________during 2018. The accounts receivable turnover_____________ and number of days’ sales in
receivables _____________ slightly. The margin of protection to creditors ______________ . The return on
total assets ______________ during 2018. The return on common stockholders’ equity ______________. 

and number of days' sales in he Treadway Commission (COSO). Based on the results of our evaluation, our management concluded that our intemal control over financial reporting was effective as of Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of NIKE, Inc. 1. NIKE,INC Opinions on the Financial Statements and Internal Control over Financlal Reporting Ne nave audited the accompanying consolidated balance sheets of NIKE, Inc. and its subsidiaries as of May 31, 2018 and 2017, and the related consolidated statements of come, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended May 31, 2018, including the related notes and financial Statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). We also have audited the Company 's Internal control over financial reporting as of May 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Financial Statement Analysis The financial statements for Nike, Inc., are presented in Appendix C. Use the following additional information (in In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial posítion of the Company as of May 31, 2018 and 2017, and the results of their operations and their cash flows for each of the three years in the period ended May 31, 2018 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. millions): Change in Accounting Principle Accounts receivable at May 31, 2016 $3,241 Inventories at May 31, 2016 4,838 As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for share-based payment awards to employees as of June 1, 2017. Basis for Opinions Total assets at May 31, 2016 21,379 The Company's management is responsible for these consolidated financial statements, for maintaining effective intemal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, indluded in Management's Annual Report on Internal Control over Financial Reporting appearing under Item 8. Our responsibility is to express opinions on the Company's consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be Independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. Stockholders' equity at May 31, 2016 12,258 1. Determine the following measures for the fiscal years ended May 31, 2018, and May 31, 2017. Assume 365 days a We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective intemal control over financial reporting was maintained in all material respects. year. Do not round interim calculations. Round the working capital amount in part (a) to the nearest dollar. Round all other final answers to one decimal place. When required, use the rounded final answers in Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of intenal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. subsequent computations. May 31, May 31, Definition and Limitations of Internal Control over Financial Reporting 2018 2017 A company's intemal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for extermal purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company, (i) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. a. Working capital (in millions) $ b. Current ratio c. Quick ratio Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures d. Accounts receivable turnover may deteriorate. e. Number of days' sales in receivables days days f. Inventory turnover IS/ PricewaterhouseCoopers LLP Portland, Oregon g. Number of days' sales in inventory days days July 24, 2018 Management's Annual Report on Internal Control Over Financial Rep h. Ratio of liabilities to stockholders' equity porting Management is responsible for establishing and maintaining adequate intermal control over financial reporting, as such term is defined in Rule 13(a) - 15(f) and Rule 15(d) - 15() of the Securities Exchange Act of 1934, as amended. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America, Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the Company; (i) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of our management and directors; and (i) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets of the Company that could have a material effect on the financial statements. i. Asset turnover j. Return on total assets % k. Return on common stockholders' equity 1. Price-earnings ratio, assuming that the market price was $72.12 per share on May 29, While "reasonable assurance" is a high level of assurance, it does not mean absolute assurance. Because of its inherent limitations, internal control over financial reporting may not prevent or detect every misstatement and instance of fraud. Controls are susceptible to manipulation, especially in instances of fraud caused by the collusion of two or more people, including our senlor management. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become Inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 2018, and $53.06 per share on May 30, 2017. 2. The working capital between 2017 and 2018. The current and quick ratios both Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of during 2018. The accounts receivable turnover May 31, 2018. receivables slightly. The margin of protection to creditors The return on PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited (1) the Consolidated Financial Statements and (2) the effectiveness of our internal control over financial reporting as of May 31, 2018 , as stated in their report herein, total assets during 2018. The return on common stockholders' equity Mark G. Parker Chairman, President and Chief Executive Officer Andrew Campion Chief Financial Officer
Transcribed Image Text:and number of days' sales in he Treadway Commission (COSO). Based on the results of our evaluation, our management concluded that our intemal control over financial reporting was effective as of Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of NIKE, Inc. 1. NIKE,INC Opinions on the Financial Statements and Internal Control over Financlal Reporting Ne nave audited the accompanying consolidated balance sheets of NIKE, Inc. and its subsidiaries as of May 31, 2018 and 2017, and the related consolidated statements of come, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended May 31, 2018, including the related notes and financial Statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). We also have audited the Company 's Internal control over financial reporting as of May 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Financial Statement Analysis The financial statements for Nike, Inc., are presented in Appendix C. Use the following additional information (in In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial posítion of the Company as of May 31, 2018 and 2017, and the results of their operations and their cash flows for each of the three years in the period ended May 31, 2018 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. millions): Change in Accounting Principle Accounts receivable at May 31, 2016 $3,241 Inventories at May 31, 2016 4,838 As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for share-based payment awards to employees as of June 1, 2017. Basis for Opinions Total assets at May 31, 2016 21,379 The Company's management is responsible for these consolidated financial statements, for maintaining effective intemal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, indluded in Management's Annual Report on Internal Control over Financial Reporting appearing under Item 8. Our responsibility is to express opinions on the Company's consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be Independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. Stockholders' equity at May 31, 2016 12,258 1. Determine the following measures for the fiscal years ended May 31, 2018, and May 31, 2017. Assume 365 days a We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective intemal control over financial reporting was maintained in all material respects. year. Do not round interim calculations. Round the working capital amount in part (a) to the nearest dollar. Round all other final answers to one decimal place. When required, use the rounded final answers in Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of intenal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. subsequent computations. May 31, May 31, Definition and Limitations of Internal Control over Financial Reporting 2018 2017 A company's intemal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for extermal purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company, (i) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. a. Working capital (in millions) $ b. Current ratio c. Quick ratio Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures d. Accounts receivable turnover may deteriorate. e. Number of days' sales in receivables days days f. Inventory turnover IS/ PricewaterhouseCoopers LLP Portland, Oregon g. Number of days' sales in inventory days days July 24, 2018 Management's Annual Report on Internal Control Over Financial Rep h. Ratio of liabilities to stockholders' equity porting Management is responsible for establishing and maintaining adequate intermal control over financial reporting, as such term is defined in Rule 13(a) - 15(f) and Rule 15(d) - 15() of the Securities Exchange Act of 1934, as amended. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America, Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the Company; (i) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of our management and directors; and (i) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets of the Company that could have a material effect on the financial statements. i. Asset turnover j. Return on total assets % k. Return on common stockholders' equity 1. Price-earnings ratio, assuming that the market price was $72.12 per share on May 29, While "reasonable assurance" is a high level of assurance, it does not mean absolute assurance. Because of its inherent limitations, internal control over financial reporting may not prevent or detect every misstatement and instance of fraud. Controls are susceptible to manipulation, especially in instances of fraud caused by the collusion of two or more people, including our senlor management. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become Inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 2018, and $53.06 per share on May 30, 2017. 2. The working capital between 2017 and 2018. The current and quick ratios both Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of during 2018. The accounts receivable turnover May 31, 2018. receivables slightly. The margin of protection to creditors The return on PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited (1) the Consolidated Financial Statements and (2) the effectiveness of our internal control over financial reporting as of May 31, 2018 , as stated in their report herein, total assets during 2018. The return on common stockholders' equity Mark G. Parker Chairman, President and Chief Executive Officer Andrew Campion Chief Financial Officer
NIKE, Inc. Consolidated Statements of Cash Flows (In millions) Cash provided by operations: Year Ended May 31, Net Income 2018 2017 2016 Adjustments to reconcile net income to net cash provided by operations: NIKE, Inc. Consolidated Statements of Income Depreclation 1,933 2$ 4,240 2$ 3,760 Deferred income taxes Stock-based compensation 747 706 649 (In millions, except per share data) (80) Amortization and other 647 (273) Net foreign currency adjustments 218 Revenues Year Ended May 31, 215 236 2018 27 Cost of sales 2017 2016 Changes in certain working capital components and other assets and liabilities: 10 13 (99) Gross profit 98 36,397 2$ 34,350 Decrease (increase) in accounts receivable 32,376 (117) Demand creation expense 20,441 19,038 17,405 (Increase) in inventories 187 15,956 15,312 Operating overhead expense 60 14,971 Decrease (increase) in prepaid expenses and other current and non-current assets (426) (255) Total selling and administrative expense 3,577 3,341 3,278 Increase (decrease) in accounts payable, accrued liabilities and other current and non-current liabilities (231) (590) Interest expense (income), net 7,934 7,222 7,191 35 Cash provided by operations (120) (161) 11,511 10,563 10,469 Cash provided (used) by Investing activities: 1,515 (158) Other expense (income), net (586) 54 59 19 4,955 Income before income taxes Purchases of short-term investments 3,846 3,399 66 (196) (140) Income tax expense Maturities of short-term investments 4,325 4,886 4,623 Sales of short-term investments (4,783) (5,928) NET INCOME (5,367) 2,392 646 863 3,613 3,623 Investments in reverse repurchase agreements 1,933 2,924 4,240 %24 3,760 Additions to property, plant and equipment 2,496 2,423 Earnings per common share: 2,386 Disposals of property, plant and equipment 150 Basic (1,028) (1,105) (1,143) Diluted Other investing activities 1.19 %24 2.56 24 2.21 3. Cash provided (used) by investing activities 13 10 1.17 2.51 2$ 2.16 (25) (34) Dividends declared per common share Cash used by financing activities: 276 %24 The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. (1,008) (1,034) 0,78 %24 0.70 24 0.62 Net proceeds from long-term debt issuance Long-term debt payments, including current portion 1,482 981 Increase (decrease) in notes payable NIKE, Inc. Consolidated Statements of Comprehensive Income (6) (44) (106) Payments on capital lease and other financing obligations 13 327 (67) Proceeds from exercise of stock options and other stock issuances (23) (17) (7) (In millions) Repurchase of common stock Year Ended May 31, 733 489 507 2018 Dividends- common and preferred 2017 (4,254) Net income 2016 (3,223) (3,238) Tax payments for net share settlement of equity awards 1,933 4,240 24 (1,243) (1,133) Other comprehensive income (loss), net of tax: 3,760 (1,022) Cash used by financing activities (55) (29) Change in net foreign currency translation adjustment (22) Effect of exchange rate changes on cash and equivalents (6) 16 (176) (4,835) (2,148) (2,974) Change in net gains (losses) on cash flow hedges Net increase (decrease) in cash and equivalents Change in net gains (losses) on other 76 (515) (757) 45 (20) (105) 34 Cash and equivalents, beginning of year (32) 441 Total other comprehensive income (loss), net of tax 670 (714) 104 CASH AND EQUIVALENTS, END OF YEAR TOTAL COMPREHENSIVE INCOME (531) (928) 3,808 3,138 3,852 2,037 2$ 3,709 24 2,832 Supplemental disclosure of cash flow information: The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement 4,249 2$ 3,808 2$ 3,138 Cash paid during the year for: Interest, net of capitalized interest NIKE, Inc. Consolidated Balance Sheets Income taxes 24 125 2$ 98 2$ 70 Non-cash additions to property, plant and equipment 529 May 31, 703 748 Dividends declared and not paid 294 In millions) 2018 2017 266 252 320 300 271 ASSETS The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. Current assets: 4,249 2$ 3,808 NIKE, Inc. Consolidated Statements of Shareholders' Equity Cash and equivalents 6. 996 2,371 Short-term Investments 3,498 3,677 Accounts receivable, net 5,261 5,055 Inventories 1,130 1,150 Common Stock Prepaid expenses and other current assets Capital in Excess of Stated Value Accumulated Other Comprehensive Income 15,134 16,061 Class A Class B Total current assets Retained 4,454 3,989 (In millions, except per share data) Shares Amount Shares Amount Earnings Total Property, plant and equipment, net 285 283 Balance at May 31, 2015 355 1,357 2$ 2$ 4,165 1,246 2$ 7,293 24 12,707 Identifiable Intangible assets, net 154 139 Stock options exercised 22 680 680 Goodwill 2,509 2,787 Deferred income taxes and other assets Conversion to Class B Common Stock (2) 2. 22,536 2$ 23,259 (3,090) (3,238) TOTAL ASSETS Repurchase of Class B Common Stock Dividends on common stock ($0.62 per share) and preferred stock ($0.10 per share) Issuance of shares to employees, net of shares withheld for employee taxes (55) (148) LIABILITIES AND SHAREHOLDERS' EQUITY (1,053) Current liabilities: (1,053) 6. 24 Current portion of long-term debt 325 336 3 105 (11) 94 Notes payable 2,279 2,048 Stock-based compensation 236 236 Accounts payable 3,011 3,269 Net income 3,760 3,760 Accrued liabilities 150 84 Other comprehensive income (loss) (928) (928) Income taxes payable 6,040 5,474 353 2$ 1,329 24 5,038 24 318 24 6,899 %2$ 12,258 Total current llabilities 3,468 3,471 Balance at May 31, 2016 17 525 525 Long-term debt 3,216 1,907 Stock options exercised Deferred income taxes and other liabilities 24 - Conversion to Class B Common Stock (24) (3,060) (3,249) Commitments and contingencies (Note 15) (189) Repurchase of Class B Common Stock Dividends on common stock ($0.70 per share) and preferred stock ($0.10 per share) Issuance of shares to employees, net of shares withheld for employee taxes (60) Redeemable preferred stock (1,159) (1,159) Shareholders' equity: Common stock at stated value: 4 121 (13) 108 3 Class A convertible-329 and 329 shares outstanding Stock-based compensation 215 215 Class B-1,272 and 1,314 shares outstanding 6,384 5,710 4,240 4,240 (92) (213) Net income Capital in excess of stated value (531) (531) Accumulated other comprehensive loss 3,517 6,907 Other comprehensive income (loss) (213) 6,907 9,812 12407 329 24 1,314 %24 24 5,710 %24 12,407 Retained eamings Balance at May 31, 2017 23,259 600 600 Total shareholders' equity 22,536 24 Stock options exercised TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY Conversion to Class B Common Stock (254) (4,013) (4,267) The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. (70) Repurchase of Class B Common Stock Dividends on common stock ($0.78 per share) and preferred stock ($0.10 per share) Issuance of shares to employees, net of shares withheld for employee taxes (1,265) (1,265) 4. 110 (28) 82 218 218 Stock-based compensation 1,933 1,933 Net income 104 104 Other comprehensive income (loss) Reclassifications to retained eamings in accordance with ASU 2018-02 17 (17) 1,272 2$ 3 $ 6,384 (92) %24 3,517 24 9,812 329 Balance at May 31, 2018 The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement.
Transcribed Image Text:NIKE, Inc. Consolidated Statements of Cash Flows (In millions) Cash provided by operations: Year Ended May 31, Net Income 2018 2017 2016 Adjustments to reconcile net income to net cash provided by operations: NIKE, Inc. Consolidated Statements of Income Depreclation 1,933 2$ 4,240 2$ 3,760 Deferred income taxes Stock-based compensation 747 706 649 (In millions, except per share data) (80) Amortization and other 647 (273) Net foreign currency adjustments 218 Revenues Year Ended May 31, 215 236 2018 27 Cost of sales 2017 2016 Changes in certain working capital components and other assets and liabilities: 10 13 (99) Gross profit 98 36,397 2$ 34,350 Decrease (increase) in accounts receivable 32,376 (117) Demand creation expense 20,441 19,038 17,405 (Increase) in inventories 187 15,956 15,312 Operating overhead expense 60 14,971 Decrease (increase) in prepaid expenses and other current and non-current assets (426) (255) Total selling and administrative expense 3,577 3,341 3,278 Increase (decrease) in accounts payable, accrued liabilities and other current and non-current liabilities (231) (590) Interest expense (income), net 7,934 7,222 7,191 35 Cash provided by operations (120) (161) 11,511 10,563 10,469 Cash provided (used) by Investing activities: 1,515 (158) Other expense (income), net (586) 54 59 19 4,955 Income before income taxes Purchases of short-term investments 3,846 3,399 66 (196) (140) Income tax expense Maturities of short-term investments 4,325 4,886 4,623 Sales of short-term investments (4,783) (5,928) NET INCOME (5,367) 2,392 646 863 3,613 3,623 Investments in reverse repurchase agreements 1,933 2,924 4,240 %24 3,760 Additions to property, plant and equipment 2,496 2,423 Earnings per common share: 2,386 Disposals of property, plant and equipment 150 Basic (1,028) (1,105) (1,143) Diluted Other investing activities 1.19 %24 2.56 24 2.21 3. Cash provided (used) by investing activities 13 10 1.17 2.51 2$ 2.16 (25) (34) Dividends declared per common share Cash used by financing activities: 276 %24 The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. (1,008) (1,034) 0,78 %24 0.70 24 0.62 Net proceeds from long-term debt issuance Long-term debt payments, including current portion 1,482 981 Increase (decrease) in notes payable NIKE, Inc. Consolidated Statements of Comprehensive Income (6) (44) (106) Payments on capital lease and other financing obligations 13 327 (67) Proceeds from exercise of stock options and other stock issuances (23) (17) (7) (In millions) Repurchase of common stock Year Ended May 31, 733 489 507 2018 Dividends- common and preferred 2017 (4,254) Net income 2016 (3,223) (3,238) Tax payments for net share settlement of equity awards 1,933 4,240 24 (1,243) (1,133) Other comprehensive income (loss), net of tax: 3,760 (1,022) Cash used by financing activities (55) (29) Change in net foreign currency translation adjustment (22) Effect of exchange rate changes on cash and equivalents (6) 16 (176) (4,835) (2,148) (2,974) Change in net gains (losses) on cash flow hedges Net increase (decrease) in cash and equivalents Change in net gains (losses) on other 76 (515) (757) 45 (20) (105) 34 Cash and equivalents, beginning of year (32) 441 Total other comprehensive income (loss), net of tax 670 (714) 104 CASH AND EQUIVALENTS, END OF YEAR TOTAL COMPREHENSIVE INCOME (531) (928) 3,808 3,138 3,852 2,037 2$ 3,709 24 2,832 Supplemental disclosure of cash flow information: The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement 4,249 2$ 3,808 2$ 3,138 Cash paid during the year for: Interest, net of capitalized interest NIKE, Inc. Consolidated Balance Sheets Income taxes 24 125 2$ 98 2$ 70 Non-cash additions to property, plant and equipment 529 May 31, 703 748 Dividends declared and not paid 294 In millions) 2018 2017 266 252 320 300 271 ASSETS The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. Current assets: 4,249 2$ 3,808 NIKE, Inc. Consolidated Statements of Shareholders' Equity Cash and equivalents 6. 996 2,371 Short-term Investments 3,498 3,677 Accounts receivable, net 5,261 5,055 Inventories 1,130 1,150 Common Stock Prepaid expenses and other current assets Capital in Excess of Stated Value Accumulated Other Comprehensive Income 15,134 16,061 Class A Class B Total current assets Retained 4,454 3,989 (In millions, except per share data) Shares Amount Shares Amount Earnings Total Property, plant and equipment, net 285 283 Balance at May 31, 2015 355 1,357 2$ 2$ 4,165 1,246 2$ 7,293 24 12,707 Identifiable Intangible assets, net 154 139 Stock options exercised 22 680 680 Goodwill 2,509 2,787 Deferred income taxes and other assets Conversion to Class B Common Stock (2) 2. 22,536 2$ 23,259 (3,090) (3,238) TOTAL ASSETS Repurchase of Class B Common Stock Dividends on common stock ($0.62 per share) and preferred stock ($0.10 per share) Issuance of shares to employees, net of shares withheld for employee taxes (55) (148) LIABILITIES AND SHAREHOLDERS' EQUITY (1,053) Current liabilities: (1,053) 6. 24 Current portion of long-term debt 325 336 3 105 (11) 94 Notes payable 2,279 2,048 Stock-based compensation 236 236 Accounts payable 3,011 3,269 Net income 3,760 3,760 Accrued liabilities 150 84 Other comprehensive income (loss) (928) (928) Income taxes payable 6,040 5,474 353 2$ 1,329 24 5,038 24 318 24 6,899 %2$ 12,258 Total current llabilities 3,468 3,471 Balance at May 31, 2016 17 525 525 Long-term debt 3,216 1,907 Stock options exercised Deferred income taxes and other liabilities 24 - Conversion to Class B Common Stock (24) (3,060) (3,249) Commitments and contingencies (Note 15) (189) Repurchase of Class B Common Stock Dividends on common stock ($0.70 per share) and preferred stock ($0.10 per share) Issuance of shares to employees, net of shares withheld for employee taxes (60) Redeemable preferred stock (1,159) (1,159) Shareholders' equity: Common stock at stated value: 4 121 (13) 108 3 Class A convertible-329 and 329 shares outstanding Stock-based compensation 215 215 Class B-1,272 and 1,314 shares outstanding 6,384 5,710 4,240 4,240 (92) (213) Net income Capital in excess of stated value (531) (531) Accumulated other comprehensive loss 3,517 6,907 Other comprehensive income (loss) (213) 6,907 9,812 12407 329 24 1,314 %24 24 5,710 %24 12,407 Retained eamings Balance at May 31, 2017 23,259 600 600 Total shareholders' equity 22,536 24 Stock options exercised TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY Conversion to Class B Common Stock (254) (4,013) (4,267) The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. (70) Repurchase of Class B Common Stock Dividends on common stock ($0.78 per share) and preferred stock ($0.10 per share) Issuance of shares to employees, net of shares withheld for employee taxes (1,265) (1,265) 4. 110 (28) 82 218 218 Stock-based compensation 1,933 1,933 Net income 104 104 Other comprehensive income (loss) Reclassifications to retained eamings in accordance with ASU 2018-02 17 (17) 1,272 2$ 3 $ 6,384 (92) %24 3,517 24 9,812 329 Balance at May 31, 2018 The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement.
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k. Return on common stockholders' equity % %
l. Price-earnings ratio, assuming that the market price was $72.12 per share on May 29, 2018, and $53.06 per share on May 30, 2017. 

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