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