Compute and Interpret the Z-score Information from the balance sheet, income statement, and statement of cash flows for Nike follows. Refer to these financial statements to answer the requirements. NIKE, INC. Consolidated Statements of Income Year Ended December 31 (In millions) 2019 2018 Revenues $39,117 $36,397 Cost of sales 21,643 20,441 Gross profit 17,474 15,956 Demand creation expense 3,753 3,577 Operating overhead expense 8,949 7,934 Total selling and administrative expense 12,702 11,511 Interest expense (income), net 49 54 Other (income) expense, net (78) 66 Income before income taxes 4,801 4,325 Income tax expense 772 2,392 Net income $ 4,029 $1,933 Consolidated Balance Sheets May 31 (in millions) 2019 2018 Current Assets Cash and cash equivalents $4,466 $ 4,249 Short-term investments 197 996 Accounts receivable, net. 4,272 3,498 Inventories 5,622 5,261 Prepaid expenses and other current assets 1,968 1,130 Total current assets 16,525 15,134 Property, plant and equipment, net 4,744 4,454 Identifiable intangible assets, net 283 285 Goodwill 154 154 Deferred income taxes 2,011 2,509 Total assets $23,717 $22,536 Liabilities and stockholders' equity Current Liabilities Current portion of long-term debt $6 $6 Notes payable 9 336 Accounts payable 2,612 2,279 Accrued pension liabilities 5,010 3,269 Income taxes payable 150 Total current liabilities 7,866 6,040 Long-term debt 3,464 3,468 Deferred income taxes and other liabilities 3,347 3,216 Shareholders' equity Class A convertible-315 and 329 shares outstanding Class B-1,253 and 1,272 shares outstanding 3 3 Capital in excess of stated value 7,163 6,384 Accumulated other comprehensive income (loss) 231 (92) Retained earnings 1,643 3,517 Total shareholders' equity 9,040 9,812 Total liabilities and stockholders' equity $23,717 $22,536 229 2019 2018 $4,029 $1,933 747 705 34 325 647 218 27 (99) 15 233 (270) 187 (490) (255) (203) 35 1,525 1,515 5,903 4,955 Consolidated Statement of Cash Flows Year Ended May 31 (in millions) Cash provided by operations: Net income Adjustments to reconcile net income to net cash provided by operations: Depreciation Deferred income taxes Stock-based compensation Amortization and other Net foreign currency adjustments Changes in certain working capital components and other assets and liabilities: (Increase) decrease in accounts receivable (Increase) decrease in inventories (Increase) decrease in prepaid expenses and other current and non-current assets Increase (decrease) in accounts payable, accrued liabilities and other current and non-current liabilities Cash provided by operations Cash provided (used) by investing activities: Purchases of short-term investments Maturities of short-term investments Sales of short-term investments Additions to property, plant and equipment Disposals of property, plant and equipment Other investing activities. Cash provided (used) by investing activities Cash used by financing activities: Long-term debt payments, including current portion Increase (decrease) in notes payable Payments on capital lease and other financing obligations Proceeds from exercise of stock options and other stock issuances Repurchase of common stock Dividends-common and preferred Tax payments for net share settlement of equity awards Cash used by financing activities Effect of exchange rate changes on cash and equivalents Net increase (decrease) in cash and equivalents Cash and equivalents, beginning of year Cash and equivalents, end of year (2,937) (4,783) 1,715 3,613 2,072 2,496 (1,119) (1,028) 5 3 (25) (264) 276 (6) 13 (6) (325) (27) 700 (23) 733 (4,286) (4,254) (1,332) (1,243) (17) (55) (5,293) (4,835) (129) 45 217 441 4,249 3,808 $4,466 $4,249 As of May 31, there were the approximate shares outstanding: 2019 - 1,253 million 2018 - 1,272 million As of May 31, the company's stock closed at the following values: 2019 - $77.14 2018 - $71.80 (a) Compute and compare the Altman Z-scores for both years. (Do not round until your final answer; then round your answers to two decimal places.) 2019 Z-score = 0 2018 Z-score = 0 Which of the following explain the trend in the Z-scores from 2018 to 2019? (Select all that apply.) Nike improved its working capital by decreasing its current liabilities. Nike decreased its liquidity due to an increase in retained earnings. Nike improved its earnings before interest and taxes by increasing its total net sales. The market value of Nike's equity improved over the year. (b) Which of the following statements best describes the company's Altman Z-scores? Both the Altman Z-scores are above 3.00 which indicate the company has a very low probability of bankruptcy. Both the Altman Z-scores are below 1.80 which indicate the company has a very high probability of bankruptcy. The Altman Z-scores have increased from 2018 to 2019 which indicates the company's bankruptcy risk has decreased. The Altman Z-scores have decreased from 2018 to 2019 which indicates the company's bankruptcy risk has decreased