The financial statements for Nike, Inc., are provided in Appendix C at the end of the text.
a. Determine the free cash flow for the year ended May 31, 2010. Assume that 90% of additions to property, plant and equipment were used to maintain productive capacity.
b. How might a lender use free cash flow to determine whether or not to give Nike, Inc. a loan?
c. Would you feel comfortable giving Nike a loan based on the free cash flow calculated in (a)?