compute Z score

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 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 49 Support 2019 2018 Consolidated Balance Sheets May 31 (in millions) Current Assets Cash and cash equivalents Short-term investments Accounts receivable, net. Inventories Prepaid expenses and other current assets Total current assets Property, plant and equipment, net Identifiable intangible assets, net Goodwill Deferred income taxes Total assets Liabilities and stockholders' equity Current Liabilities Current portion of long-term debt Notes payable Accounts payable Accrued pension liabilities Income taxes payable Total current liabilities Long-term debt Deferred income taxes and other liabilities Shareholders' equity Class A convertible-315 and 329 shares outstanding Class B-1,253 and 1,272 shares outstanding Capital in excess of stated value $ 4,466 $ 4,249 197 996 4,272 3,498 5,622 5,261 1,968 1,130 16,525 15,134 4,744 4,454 283 285 154 154 2,011 2,509 $23,717 $22,536 $6 $6 9 336 2,279 3,269 150 2,612 5,010 229 7,866 3,464 3,347 6,040 3,468 3,216 3 3 7,163 6,384 5,010 3,269 229 150 7,866 6,040 3,464 3,468 3,347 3,216 Accrued pension liabilities Income taxes payable Total current liabilities Long-term debt Deferred income taxes and other liabilities Shareholders' equity Class A convertible-315 and 329 shares outstanding Class B,1,253 and 1,272 shares outstanding Capital in excess of stated value Accumulated other comprehensive income (loss) Retained earnings Total shareholders' equity Total liabilities and stockholders' equity -- 3 3 7,163 6,384 231 (92) 1,643 3,517 9,040 9,812 $23,717 $22,536 Consolidated Statement of Cash Flows Year Ended May 31 (in millions) 2019 2018 Cash provided by operations: Net income $4,029 $1,933 Adjustments to reconcile net income to net cash provided by operations: Depreciation 705 747 Deferred income taxes 34 647 Stock-based compensation 325 218 Amortization and other 15 27 Net foreign currency adjustments 233 (99) Changes in certain working capital components and other assets and liabilities: (Increase) decrease in accounts receivable (270) 187 (Increase) decrease in inventories (490) (255) (Increase) decrease in prepaid expenses and other current and non-current assets (203) 35 Increase (decrease) in accounts payable, accrued liabilities and other current and non-current liabilities 1,525 1,515 Cash provided by operations 5,903 4,955 Cash provided (used) by investing activities: Purchases of short-term investments (2,937) (4.783) Maturities of short-term investments 1,715 3,613 Sales of short-term investments 2,072 2,496 Additions to property, plant and equipment (1,119) (1.028) Disposals of property, plant and equipment (25) Other investing activities (264) 276 Cash provided (used) by investing activities Cash used by financing activities: 5 3 (1.119) (1,028) 5 3 (25) (264) 276 (27) 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 (6) (6) (325) 13 (23) 700 733 (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 = 2.98 X 2018 Z-score = 3.2 X Which of the following explain the trend in the Z-scores from 2018 to 2019? (Select all that apply.) no Nike improved its working capital by decreasing its current liabilities. no Nike decreased its liquidity due to an increase in retained earnings, yes = Nike improved its earnings before interest and taxes by increasing its total net sales. yes 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? OBoth the Altman Z-scores are above 3.00 which indicate the company has a very low probability of bankruptcy. OBoth the Altman Z-scores are below 1.80 which indicate the company has a very high probability of bankruptcy. OThe Altman Z-scores have increased from 2018 to 2019 which indicates the company's bankruptcy risk has decreased