Forecasting the Income Statement, Balance Sheet, and Statement of Cash Flows The following are the financial statements of Nike, Inc.

NIKE INC.
Consolidated Income Statement
For Year Ended ($millions)		May 31, 2016
Revenues		$32,376
Cost of sales		17,405
Gross profit		14,971
Demand creation expense		3,278
Operating overhead expense		7,191
Total selling and administrative expense		10,469
Interest expense (income), net		19
Other (income) expense, net		(140)
Income before income taxes		4,623
Income tax expense		863
Net income		$3,760

NIKE INC.
Consolidated Balance Sheets
millions		May 31, 2016	May 31, 2015
Current Assets
Cash and equivalents		$3,138	$3,852
Short-term investments		2,319	2,072
Accounts receivable, net		3,241	3,358
Inventories		4,838	4,337
Prepaid expenses and other current assets		1,489	1,968
Total current assets		15,025	15,587
Property, plant and equipment, net		3,520	3,011
Identifiable intangible assets (net)		281	281
Goodwill		131	131
Deferred income taxes and other assets		2,439	2,587
Total assets		$21,396	$21,597
Current liabilities:
Current portion of long-term debt		$44	$107
Notes payable		1	74
Accounts payable		2,191	2,131
Accrued liabilities		3,037	3,949
Income taxes payable		85	71
Total current liabilities		5,358	6,332
Long-term debt		2,010	1,079
Deferred income taxes and other liabilities		1,770	1,479
Total liabilities		9,138	8,890
Shareholders' Equity
Class A covertible common stock		0	0
Class B common stock		3	3
Capital in excess of stated value		7,786	6,773
Accumulated other comprehensive income		318	1,246
Retained earnings		4,151	4,685
Total shareholders' equity		12,258	12,707
Total liabilities and shareholders' equity		$21,396	$21,597

We forecast Nike's income statement using the following forecast assumptions:
Revenue growth based on growth in revenues from 2015 to 2016	6.0%
Cost of sales/Revenues	53.8%
Demand creation expense/Revenues	10.1%
Operating overhead expenses/Revenues	22.2%
Income tax expense/Income before income taxes	18.7%

Instructions: Forecast Nike's fiscal year 2017 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 Inc. Forecasted Statement of Income (in $ millions)
		2017 Est
Revenues		Answer
Cost of sales		Answer
Gross profit		Answer
Demand creation expense		Answer
Operating overhead expense		Answer
Total selling and administrative expense		Answer
Interest income/expense, net		Answer
Other income/expense, net		Answer
Income before income taxes		Answer
Income tax expense		Answer
Net income		Answer

We forecast Nike's balance sheet using the following forecast assumptions:

Accounts receivable/Revenues	10.0%
Inventories/Revenues	14.9%
Prepaid expenses and other current assets/Revenues	4.6%
Depreciation expense/Prior-year PPE, net (incl. in overhead)	21.6%
Amortization expense	$13
L-T deferred income taxes and other assets/Revenues	7.5%
Accounts payable/Revenues	6.8%
Accrued liabilities/Revenues	9.4%
Income taxes payable/Revenues	0.3%
Deferred income taxes and other liabilities/Revenues	5.5%
Capital expenditures/Revenues	3.5%
Dividends/Net income	27.2%
Current portion of L/T debt due in 2018	$6

Instructions: Forecast Nike's fiscal year 2017 balance sheet.

• Assume no change for: short-term investments, goodwill, notes payable, common stock, capital in excess of stated value and accumulated other comprehensive income.

• Round forecasts to $ millions.

Nike Inc. Forecasted Balance Sheet ($ in millions)
	2016 Actual	2017 Est.
Cash and equivalents	$ 3,138	Answer
Short-term investments	2,319	Answer
Accounts receivable, net	3,241	Answer
Inventories	4,838	Answer
Prepaid expenses and other current assets	1,489	Answer
Total current assets	15,025	Answer
Property, plant and equipment, net	3,520	Answer
Identifiable intangible assets, net	281	Answer
Goodwill	131	Answer
Deferred income taxes and other assets	2,439	Answer
Total assets	$21,396	Answer
Current portion of long-term debt	$44	Answer
Notes payable	1	Answer
Accounts payable	2,191	Answer
Accrued liabilities	3,037	Answer
Income taxes payable	85	Answer
Total current liabilities	5,358	Answer
Long-term debt	2,010	Answer
Deferred income taxes and other liabilities	1,770	Answer
Total liabilities	9,138	Answer
Shareholders' equity:
Class A Convertible Common Stock	0	Answer
Class B common stock	3	Answer
Capital in excess of stated value	7,786	Answer
Accumulated other comprehensive income	318	Answer
Retained earnings	4,151	Answer
Total shareholders' equity	12,258	Answer
Total liabilities and shareholders' equity	$21,396	Answer

Instructions: Forecast Nike's fiscal year 2017 stastement of cash flows.

Use negative signs with your answers below, when appropriate.

NIKE INC.
Forecasted Statement of Cash Flows ($ in millions)
	2017 Est.
Net income	Answer
Add: depreciation	Answer
Add: amortization	Answer
Change in Accounts receivable	Answer
Change in Inventories	Answer
Change in Prepaid expenses & other current assets	Answer
Change in Deferred income taxes and other assets	Answer
Change in Accounts payable	Answer
Change in Accrued liabilities	Answer
Change in Income taxes payable	Answer
Change in Deferred income taxes and other liabilities	Answer
Cash from operating	Answer
CAPEX	Answer
Cash for investing	Answer
Decrease in debt, net	Answer
Dividends	Answer
Cash for financing	Answer
Change in cash	Answer
Cash at start of year	Answer
Cash at end of year	Answer