Nike reports the following information relating to its manufacturing activities in footnotes to its fiscal \(200810-\mathrm{K}\) report.

a. What effect does the use of contract manufacturers have on Nike's balance sheet?
\(b\). How does Nike's use of contract manufacturers affect Nike's return on net operating assets (RNOA) and its components, net operating profit margin (NOPM) and net operating asset turnover (NOAT)? Explain

c. Nike executes agreements with its contract manufacturers to purchase their output. How are such "executory contracts" reported under GAAP? Does your answer suggest a possible motivation for the use of contract manufacturing?

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Manufacturing Virtually all of our footwear is produced outside of the United States. In fiscal 2008, contract suppliers in China, Vietnam, Indonesia and Thailand manufactured 36 percent, 33 percent, 21 percent and 9 percent of total NIKE brand footwear, respectively. We also have manufacturing agreements with independent factories in Argentina, Brazil, India, Italy and South Africa to manufacture footwear for sale primarily within those countries. Our largest single footwear factory accounted for approximately 6 percent of total fiscal 2008 footwear production.