Financial Statement Analysis
The financial statements for Nike, Inc., are presented in Appendix C. 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 |
| a. | Working capital (in millions) | $ | fill in the blank 1 | $ | fill in the blank 2 | |
| b. | Current ratio | | fill in the blank 3 | | fill in the blank 4 | |
| c. | Quick ratio | | fill in the blank 5 | | fill in the blank 6 | |
| d. | Accounts receivable turnover | | fill in the blank 7 | | fill in the blank 8 | |
| e. | Number of days' sales in receivables | | fill in the blank 9 days | | fill in the blank 10 days | |
| f. | Inventory turnover | | fill in the blank 11 | | fill in the blank 12 | |
| g. | Number of days' sales in inventory | | fill in the blank 13 days | | fill in the blank 14 days | |
| h. | Ratio of liabilities to stockholders' equity | | fill in the blank 15 | | fill in the blank 16 | |
| i. | Asset turnover | | fill in the blank 17 | | fill in the blank 18 | |
| j. | Return on total assets | | fill in the blank 19% | | fill in the blank 20% | |
| k. | Return on stockholders' equity | | fill in the blank 21% | | fill in the blank 22% | |
| 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. | | fill in the blank 23 | | fill in the blank 24 | |
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 stockholders equity .
NIKE, Inc. Consolidated Statements of Income Year Ended May 31, 2017 2016 $ 34 350 $ 19,038 (In milions, except per share data) Revenues Cost of sales Gross profit Demand creation expense Operating overhead expense Total selling and administrative expense Interest expense (income), net Other expense (income), net Income before income taxes Income tax expense NET INCOME 2018 36,397 20.441 15,956 3,577 7,934 11.511 54 66 15,312 3,341 7 222 10,563 59 (196) 4,886 546 32,376 17.405 14.971 3.278 7.191 10.469 19 (140) 4.623 4,325 2,392 1,933 863 $ 4,240 $ 3,760 Eamings per common share Basic Diluted 1.19 $ 2.56 2.51 $ $ 2.21 2.16 1.17 $ 0.78 $ 0.70 $ 0.62 Dividends declared per common share The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. NIKE, Inc. Consolidated Statements of Comprehensive Income 2018 Year Ended May 31, 2017 1,933 $ 4,240 2016 $ 3,780 16 (in Millions) Net income Other comprehensive income (los), net of tax: Change in net foreign currency translation adjustment Change in net gains (losses) on cash flow hedges Change in net gains (1088ea) on other Total other comprehensive income (los), net of tex TOTAL COMPREHENSIVE INCOME $ The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement (6) 76 34 104 2,037 (176) (757) 5 (515) (32) (531) 3,709 (828) $ $ 2,832 NIKE, Inc. Consolidated Balance Sheets May 31, 2018 2017 $ 4,249 $ 996 3.808 2.371 3,677 3,498 5,055 5,281 1,130 1,150 15,134 4,454 285 16,061 3.989 283 154 139 2.787 2,509 22,536 $ 23,259 6 $ 6 336 (in millions) ASSETS Current assets: Cash and 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 Goodwil Deferred income taxes and other assets TOTAL ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt Notes payable Accounts payable Accrued liabilities Income taxes payable Total current liabilities Long-term debt Deferred income taxes and other abilities Commitments and contingencies (Note 15) Redeemable preferred stock Shareholders' equity: Common stock at stated value Class A convertible - 320 and 329 shares outstanding Class B - 1.272 and 1,314 shares outstanding Capital in excess of stated value Accumulated other comprehensive loss Retained earnings Total shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement 325 2,048 3,011 84 2,279 3,269 150 6,040 3,488 3,216 5,474 3,471 1,907 3 6,384 (92) 3,517 9,812 22,536 5.710 (213) 6.907 12.407 $ 23,259 Year Ended May 31, 2017 2018 2016 1,933 $ 4,240 $ 3,780 747 649 547 706 (273) 215 10 (117) (80) 236 218 13 27 (99) 98 187 (255) 35 1,515 4,955 (426) (231) (120) (158) 3,846 60 (590) (161) (586) 3,399 (4,783) 3,613 2.496 (5,928) 3,623 2,423 (5,367) 2,924 2,396 150 (1,143) 10 6 (in milions) Cash provided by operations: Net income Adjustments to reconcile net income to net cash provided by operations: Depreciation Deferred income taxes Stock-based compensation Amorization and other Net foreign currency adjustments Changes in certain working capital components and other assets and liabilities: Decrease increase) in accounts receivable (Increase) in inventories Decrease increase) 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 Investments in reverse repurchase agreements 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: Not proceeds from long-term debt issuance Long-term debt payments, including current portion Increase (decrease) in notes payable Payments on capital lease and other financing obligations Proceeds from exorcise 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 Supplemental disclosure of cash flow Information: Cash paid during the year for: Interest, net of capitalized interest Income taxes Non-cash additions to property, plant and equipment Dividends declared and not paid The accompanying Motos to the Consolidated Financial Statements are an integral part of this statement. (1,028) 3 (25) 276 (1,105) 13 (34) (1,008) (1,034) 1.482 991 (6) 13 (106) (67) (23) 733 (4,254) (1,243) (55) (4,835) 45 (44) 327 (17) 489 (3,223) (1,133) (29) (2,148) (20) 670 3,138 507 (3,238) (1,022) (22) (2,974) (105) (714) 3,852 3,138 441 3,808 4,249 $ 3,808 $ 125 $ 98 $ 70 529 703 266 748 252 294 320 300 271 Accumulated Other Comprehensive Income 1246 Retained Earnings $ 7,293 6 $ Total 12,707 680 (3,090) (3.238) (1,063) (1,063) 94 3,760 236 3.760 (928) 12,258 (928) 318 $ $ 6,899 $ 525 (3,060) (3,249) Common Stock Capital in Class A Class B Excess of Stated (in Millions, except per share data) Shares Amount Shares Amount Value Balance at May 31, 2015 355 $ 1,357 $ 3 $ 4,165 Stock options exercised 22 680 Conversion to Class B Common Stock (2) 2 Repurchase of Class B Common Stock (55) (149) 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 3 105 Stock-based compensation 236 Net income Other comprehensive Income (loss) Balance at May 31, 2016 353 $ 1,320 $ 3 $ 5,038 Stock options exercised 17 525 Conversion to Class B Common Stock (24) 24 Repurchase of Class B Common Stock (60) (189) Dividends on common stock ($0.70 per share) and preferred stock ($0.10 per Issuance of shares to employees, net of shares withheld for employee taxes 121 Stock-based compensation 215 Net Income Other comprehensive income (loss) Balance at May 31, 2017 329 $ 1,314 $ 3 $ 5,710 Stock options exercised 24 800 Conversion to Class B Common Stock Repurchase of Class B Common Stock (70) (254) Dividends on common stock ($0.78 per share) and preferred stock ($0.10 per shara) Issuance of shares to employees, net of shares withheld for employee taxes 110 Stock-based compensation 218 Net income Other comprehensive income foss) Reclassifications to retained gamings in accordance with ASU 2018-02 Balance at May 31, 2018 329 $ 1,272 $ 3 $ 6,384 The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. share) (1,159) (1,159) (13) 4,240 108 215 4,240 (531) 12,407 600 (531) (213) $ $ 6,907 $ (4,013) (4,267) (1,265) (1.265) (28) 82 218 1,933 1,933 104 104 17 (17) 3,517 $ (92) $ s 9,812
