NIKE, INC. Consolidated Statements of Income ear Ended December 31 (In millions) 2019 2018 evenues $39,117 $36,397 ost of sales 21,643 20,441 ross profit 17,474 15,956 emand creation expense 3,753 3,577 perating overhead expense 8,949 7,934 otal selling and administrative expense 12,702 11,511 nterest expense (income), net 49 54 other (income) expense, net (78) come before income taxes 4,801 4,325 come tax expense 772 2,392 let income $ 4,029 $1,933 66 Consolidated Balance Sheets May 31 (in millions) 2019 2018 equivalents estments vable, net ses and other current assets ssets $4,466 $4,249 197 996 4,272 3,498 5,622 5,261 1,968 1,130 16,525 15,134 4,744 4,454 283 285 154 154 2,011 2.509 $23,717 $22,536 t and equipment, net angible assets, net ne taxes stockholders' equity ties n of long-term debt $6 $6 9 336 ble on liabilities payable 2,612 5,010 229 150 ders' equity and stockholders' equity 9,040 9,812 $23,717 $22,536 ent of Cash Flows llions) 2019 2018 $4,029 $1,933 operations: 705 747 34 647 325 218 15 27 233 (99) ets and liabilities: (270) 187 (490) (255) d non-current assets (203) 35 other current and non-current liabilities 1,525 1,515 5,903 4,955 (2,937) (4,783) 1,715 3,613 2,072 2,496 (1,119) (1,028) 5 3 (25) (264) 276 (6) (6) (325) 13 (27) (23) 700 (4.286) (4 (1,332) (1.243) nces ets and liabilities: (270) 187 (490) (255) d non-current assets (203) 35 d other current and non-current liabilities 1,525 1,515 5,903 4,955 (2,937) (4,783) 1,715 3,613 2,072 2,496 (1,119) (1,028) 5 3 (25) (264) 276 nces (6) (6) (325) 13 (27) (23) 700 733 (4,286) (4,254) (1,332) (1,243) (17) (55) (5,293) (4,835) (129) 45 217 441 4,249 3,808 $4,466 $4,249 (b) Compute total liabilities-to-equity ratio and total debt-to-equity ratio for 2018 and 2019. HINT: Nike's total debt has three components reported on the balance sheet. Note: Round answers to two decimal places. 2019 total liabilities-to-equity = 1.62 2018 total liabilities-to-equity = 1.3 2019 total debt-to-equity = 0.38 2018 total debt-to-equity = 0.35 x Which of the following best describes the company's total liabilities-to-equity ratios and total debt-to-equity ratios for 2019 and 2018? OThe total liabilities-to-equity ratio has decreased while the total debt-to-equity ratio has increased in the period from 2018 to 2019, which suggests the company has decreased the use of short-term debt financing. OThe total liabilities-to-equity ratio has increased while the total debt-to-equity ratio remained the same in the period from 2018 to 2019, which suggests the company has increased the use of short-term debt financing. OBoth the total liabilities-to-equity and total debt-to-equity ratios have increased from 2018 to 2019. These increases suggest that the company is less solvent. X OBoth the total liabilities-to-equity and total debt-to-equity ratios have decreased from 2018 to 2019. The difference between these two measures reveals that any solvency concerns would be for the short run. (c) Compute times interest earned ratio, cash from operations to total debt ratio, and free operating cash flow to total debt ratios. Financial statements included the following footnote: "Included in Interest expense (income), net was interest income related to the Company's investment portfolio of $82 million and $70 million for the years ended May 31, 2019 and 2018, respectively." Note: Round answers to two decimal places. 2019 times interest earned = 146.97 x 2018 times interest earned = 273.69 x 2019 cash from operations to total debt = 1.7 2018 cash from operations to total debt = 1.43 x 2019 free operating cash flow to total debt = 1.38 2018 free operating cash flow to total debt = 1.13 X
