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

Consolidated Statements of Income
	Year ended May 31
In Millions	2011	2010
Revenues	$ 22,862	$ 19,014
Cost of sales	11,354	10,214
Gross profit	11,508	8,800
Demand creation expense	3,248	2,356
Operating overhead expense	5,245	3,970
Total selling and administrative expense	8,493	6,326
Interest expense (income), net	4	6
Other (income)	(33)	(49)
Income before income taxes	3,044	2,517
Income taxes	911	610
Net income	$ 2,133	$ 1,907

Balance Sheets
	May 31
In Millions	2011	2010
Assets
Cash and equivalents	$ 1,955	$ 3,079
Short-term investments	2,583	2,067
Accounts receivable, net	3,138	2,650
Inventories	2,715	2,041
Deferred income taxes	312	249
Prepaid expenses and other current assets	594	873
Total current assets	11,297	10,959
Property, plant and equipment, net	2,115	1,932
Identifiable intangible assets (net)	487	467
Goodwill	205	188
Deferred income taxes and other assets	894	873
Total assets	$ 14,998	$ 14,419
Liabilities and Shareholders' Equity
Current portion of long-term debt	$ 200	$ 7
Notes payable	187	139
Accounts payable	1,469	1,255
Accrued liabilities	1,985	1,904
Income taxes payable	117	59
Total current liabilities	3,958	3,364
Long-term debt	276	446
Deferred income taxes and other liabilities	921	855
Total liabilities	5,155	4,665
Common stock at stated value	3	3
Capital in excess of stated value	3,944	3,441
Accumulated other comprehensive income	95	215
Retained earnings	5,801	6,095
Total shareholders' equity	9,843	9,754
Total liabilities and shareholders' equity	$ 14,998	$ 14,419

We forecast Nike's income statement using the following forecast assumptions:

Revenue growth based on growth in revenues from 2010 to 2011	20%
Cost of sales/Revenues	49.7%
Demand creation expense/Revenues	14.2%
Operating overhead expenses/Revenues	22.9%
Income taxes/Income before income taxes	29.9%

Instructions: Forecast Nike's fiscal year 2012 income statement.

• Assume no change for: other income and interest expense.

• Round forecasts to $ millions.

• Do not use negative signs with your answers in the income statement.

Consolidated Statements of Income
($ millions)	2011	2012
Revenues	$22,862
Cost of sales	11,354
Gross profit	11,508
Demand creation expense	3,248
Operating overhead expense	5,245
Interest expense, net	4
Other income	33
Income before income taxes	3,044
Income taxes	911
Net Income	$ 2,133

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

Accounts receivable/Revenues	13.7%
Inventories/Revenues	11.9%
Deferred income taxes/Revenues	1.4%
Prepaid expenses and other current assets/Revenues	2.6%
L-T deferred income taxes and other assets/Revenues	3.9%
Depreciation expense/Prior-year PPE, net (incl. in overhead)	17.3%
Amortization expense	$24
Accounts payable/Revenues	6.4%
Accrued liabilities/Revenues	8.7%
Income taxes payable/Revenues	0.5%
Deferred income taxes and other liabilities/Revenues	4.0%
Capital expenditures/Revenues	1.9%
Dividends/Net income	26.0%
Current portion of L/T debt due in 2013	$48

Instructions: Forecast Nike's fiscal year 2012 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.

Balance Sheet
($ millions)	2011	2012
Assets
Cash and equivalents	$ 1,955
Short-term investments	2,583
Accounts receivable, net	3,138
Inventories	2,715
Deferred income taxes	312
Prepaid expenses and other current assets	594
Total current assets	11,297
Property, plant and equipment, net	2,115
Identifiable intangible assets, net	487
Goodwill	205
Deferred income taxes and other assets	894
Total assets	$14,998
Liabilities and Shareholders' Equity
Current portion of long-term debt	$ 200
Notes payable	187
Accounts payable	1,469
Accrued liabilities	1,985
Income taxes payable	117
Total current liabilities	3,958
Long-term debt	276
Deferred income taxes and other liabilities	921
Total liabilities	5,155
Common stock at stated value	3
Capital in excess of stated value	3,944
Accumulated other comprehensive income	95
Retained earnings	5,801
Total shareholders' equity	9,843
Total liabilities and shareholders' equity	$14,998

Instructions: Forecast Nike's fiscal year 2012 stastement of cash flows.

Use negative signs with your answers below, when appropriate.

Nike's Forecasted Statement of Cash Flows
($ millions)	2012 Est.
Net income
Add: depreciation
Add: amortization
Change in Accounts receivable
Change in Inventories
Change in Deferred income taxes
Change in Prepaid expenses & other current assets
Change in LT Deferred income taxes & other assets
Change in Accounts payable
Change in Accrued liabilities
Change in Income taxes payable
Change in LT Deferred income taxes and other liabilities
Net cash from operating activities
Capital expenditures
Net cash from investing activities
Dividends
Payments of LT debt
Net cash from financing activities
Net change in cash
Beginning cash
Ending cash