Question
Forecasting the Income Statement, Balance Sheet, and Statement of Cash Flows The following are the financial statements of Nike, Inc. Consolidated Statements of Income Year
Forecasting the Income Statement, Balance Sheet, and Statement of Cash Flows The following are the financial statements of Nike, Inc.
Consolidated Statements of Income | |||
---|---|---|---|
Year ended May 31 | |||
(in Millions) | 2013 | 2012 | 2011 |
Income from continuing operations: | |||
Revenues | $25,313 | $23,331 | $20,117 |
Cost of sales | 14,279 | 13,183 | 10,915 |
Gross profit | 11,034 | 10,148 | 9,202 |
Demand creation expense | 2,745 | 2,607 | 2,344 |
Operating overhead expense | 5,035 | 4,458 | 4,017 |
Total selling and administrative expense | 7,780 | 7,065 | 6,361 |
Interest expense (income), net | (3) | 4 | 4 |
Other (income) | (15) | 54 | (25) |
Income before income taxes | 3,272 | 3,025 | 2,862 |
Income tax expense | 808 | 756 | 690 |
Net income from continuing operations | 2,464 | 2,269 | 2,172 |
Net income (loss) from discontinued operations | 21 | (46) | (39) |
Net income | $ 2,485 | $ 2,223 | $ 2,133 |
Consolidated Balance Sheets | ||
---|---|---|
In Millions | 2013 | 2012 |
Assets | ||
Cash and equivalents | $ 3,337 | $ 2,317 |
Short-term investments | 2,628 | 1,440 |
Accounts receivable, net | 3,117 | 3,132 |
Inventories | 3,434 | 3,222 |
Deferred income taxes | 308 | 262 |
Prepaid expenses and other current assets | 802 | 857 |
Assets of discontinued operations | -- | 615 |
Total current assets | 13,626 | 11,845 |
Property, plant and equipment, net | 2,452 | 2,209 |
Identifiable intangible assets (net) | 382 | 370 |
Goodwill | 131 | 131 |
Deferred income taxes and other assets | 993 | 910 |
Total assets | $ 17,584 | $ 15,465 |
Liabilities and Shareholders' Equity | ||
Current liabilities: | ||
Current portion of long-term debt | $ 57 | $ 49 |
Notes payable | 121 | 108 |
Accounts payable | 1,646 | 1,549 |
Accrued liabilities | 1,986 | 1,941 |
Income taxes payable | 98 | 65 |
Liabilities of discontinued operations | 18 | 170 |
Total current liabilities | 3,926 | 3,882 |
Long-term debt | 1,210 | 228 |
Deferred income taxes and other liabilities | 1,292 | 974 |
Total liabilities | 6,428 | 5,084 |
Redeemable preferred stock | -- | -- |
Shareholders' Equity | ||
Common sotck at stated value | ||
Class A covertible -- 178 and 180 shares outstanding | -- | -- |
Class B -- 716 and 736 shares outstanding | 3 | 3 |
Capital in excess of stated value | 5,184 | 4,641 |
Accumulated other comprehensive income | 274 | 149 |
Retained earnings | 5,695 | 5,588 |
Total shareholders' equity | 11,156 | 10,381 |
Total liabilities and shareholders' equity | $ 17,584 | $ 15,465 |
We forecast Nike using the following forecast assumptions: | |
Revenue growth based on growth in revenues from 2012 to 2013 | 8.0% |
Cost of sales/Revenues | 56.4% |
Demand creation expense/Revenues | 10.8% |
Operating overhead expenses/Revenues | 19.9% |
Net Income from discontinued operations | $0 |
Income tax expense/Income before income taxes | 24.7% |
Instructions: Forecast Nike's fiscal year 2014 income statement.
Assume no change for other income and interest income.
Round forecasts to $ millions.
Do not use negative signs with your answers in the income statement.
Nike's Forecasted Income Statement | ||
---|---|---|
($ millions) | 2014 | |
Revenues | $Answer | |
Cost of sales | Answer | |
Gross profit | Answer | |
Demand creation expense | Answer | |
Operating overhead expense | Answer | |
Interest income, net | Answer | |
Other income | Answer | |
Income before income taxes | Answer | |
Income taxes | Answer | |
Net income | $Answer |
Instructions: Forecast Nike's fiscal year 2014 balance sheet.
Assume no change for: short-term investments, goodwill, notes payable, liabilities from discontinued operations, common stock, capital in excess of stated value and accumulated other comprehensive income.
Round forecasts to $ millions.
We forecast Nike's balance sheet using the following forecast assumptions:
Accounts receivable/Revenues | 12.3% |
Inventories/Revenues | 13.6% |
Deferred income taxes/Revenues | 1.2% |
Prepaid expenses and other current assets/Revenues | 3.2% |
Depreciation expense/Prior-year PPE, net (incl. in overhead) | 19.8% |
Amortization expense | $78 |
L-T deferred income taxes and other assets/Revenues | 3.9% |
Accounts payable/Revenues | 6.5% |
Accrued liabilities/Revenues | 7.8% |
Income taxes payable/Revenues | 0.4% |
Deferred income taxes and other liabilities/Revenues | 5.1% |
Capital expenditures/Revenues | 2.5% |
Dividends/Net income | 28.3% |
Current portion of L/T debt due in 2015 | $46 |
Nike's Forecasted Balance Sheet | ||
---|---|---|
($ millions) | 2013 | 2014 |
Assets | ||
Cash and equivalents | $ 3,337 | $Answer |
Short-term investments | 2,628 | Answer |
Accounts receivable, net | 3,117 | Answer |
Inventories | 3,434 | Answer |
Deferred income taxes | 308 | Answer |
Prepaid expenses and other current assets | 802 | Answer |
Total current assets | 13,626 | Answer |
Property, plant and equipment, net | 2,452 | Answer |
Identifiable intangible assets, net | 382 | Answer |
Goodwill | 131 | Answer |
Deferred income taxes and other assets | 993 | Answer |
Total assets | $17,584 | $Answer |
Liabilities and Shareholders' Equity | ||
Current portion of long-term debt | $ 57 | $ Answer |
Notes payable | 121 | Answer |
Accounts payable | 1,646 | Answer |
Accrued liabilities | 1,986 | Answer |
Income taxes payable | 98 | Answer |
Liabilities of discontinued operations | 18 | Answer |
Total current liabilities | 3,926 | Answer |
Long-term debt | 1,210 | Answer |
Deferred income taxes and other liabilities | 1,292 | Answer |
Total liabilities | 6,428 | Answer |
Class B common stock | 3 | Answer |
Capital in excess of stated value | 5,184 | Answer |
Accumulated other comprehensive income | 274 | Answer |
Retained earnings | 5,695 | Answer |
Total shareholders' equity | 11,156 | Answer |
Total liabilities and shareholders' equity | $17,584 | $ Answer |
Instructions: Forecast Nike's fiscal year 2014 stastement of cash flows.
Use negative signs with your answers below, when appropriate.
Nike's Forecasted Statement of Cash Flows | |
---|---|
($ millions) | 2014 Est. |
Net income | $ Answer |
Add: depreciation | Answer |
Add: amortization | Answer |
Change in Accounts receivable | Answer |
Change in Inventories | Answer |
Change in Deferred income taxes | Answer |
Change in Prepaid expenses & other current assets | Answer |
Change in LT Deferred income taxes & other assets | Answer |
Change in Accounts payable | Answer |
Change in Accrued liabilities | Answer |
Change in Income taxes payable | Answer |
Change in LT Deferred income taxes and other liabilities | Answer |
Net cash from operating activities | Answer |
Capital expenditures | Answer |
Net cash from investing activities | Answer |
Dividends | Answer |
Payments of LT debt | Answer |
Net cash from financing activities | Answer |
Net change in cash | Answer |
Beginning cash | Answer |
Ending cash | $ Answer |
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