Free Cash Flow
The financial statements for Nike, Inc., are provided in Appendix D.
a Determine the free cash flow for the most recent fiscal year. Assume that 90% of the additions to property, plant, and equipment were used to maintain productive capacity. Round to the nearest thousand dollars.
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NIKE, Inc. Consolidated Statements of Cash Flows Year Ended May 31 In millions Cash provided by operations: Net income Income charges (credits) not affecting cash: 2016 2015 2014 $3,760 $ 3,273 $ 2,693 Depreciation Deferred income taxes Stock-based compensation Amortization and other Net foreign currency adjustments 191 424 Changes in certain working capital components and other assets and liabilities (216) (621) Decrease (increase) in accounts receivable (Increase) in inventories (Increase) in prepaid expenses and other current assets (Decrease) increase in accounts payable, accrued liabilities and income taxes pavable 60 889 3,096 1,237 525 Cash provided by operations Cash used by investing activities: (5,367) 2,924 2,386 (5,386) 3,932 1,126 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 Decrease (increase) in other assets, net of other liabilities (4,936) 3,655 2,216 1,143) 880) 6 2 Cash used by investing activities Cash used by financing activities: (1,207) Net proceeds from long-term debt issuance Long-term debt payments, including current portion (Decrease) increase in notes payable Payments on capital lease obligations Proceeds from exercise of stock options and other stock issuances Excess tax benefits from share-based payment arrangements Repurchase of common stock Dividends-common and preferred 981 106) (67) 507 281 (3,238) 1,022 (2,671) 105 383 132 (2,534) 799 Cash used by financing activities Effect of exchange rate changes on cash and equivalents Net (decrease) increase 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: (2,790) 83 3,852 $3,138 1,632 2,220 3,852 $ 1,117) 3,337 2,220 Interest, net of capitalized interest Income taxes 748 1,262 Non-cash additions to property, plant and equipment Dividends declared and not paid 856 167 209 271 240
