Nike, Inc., Problem

Financial Statement Analysis The financial statements for Nike, Inc., are presented in at the end of the text. The following additional information is available (in thousands):

Accounts receivable at May 31, 2013	$ 3,117
Inventories at May 31, 2013	3,484
Total assets at May 31, 2013	17,545
Stockholders' equity at May 31, 2013	11,081

Instructions

1. Determine the following measures for the fiscal years ended May 31, 2015, and May 31. (Round ratios and percentages to one decimal place.)
   1. Number of days' sales in receivables
   2. Inventory turnover
   3. Number of days' sales in inventory
   4. Ratio of liabilities to stockholders' equity
   5. Asset turnover
   6. Return on total assets, assuming interest expense is $28 million for the year ending May 31, 2015, and $24 million for the year ending May 31, 2014

13343176 NIKE, Inc. Consolidated Statements of Income Year Ended May 31, 2014 2015 2013 $ 30.601 $ 16,534 14,067 3,213 6,679 9,892 27,799 15,353 12,446 3,031 5,735 8,766 25,313 14,279 11,034 2,745 5,051 7,796 (3) 28 33 103 (15) 3,256 (In millions, except per share data) Income from continuing operations: Revenues Cost of sales Gross profit Demand creation expense Operating overhead expense Total selling and administrative expense Interest expense (income), net (Notes 6, 7 and 8) Other (income) expense, net (Note 17) Income before income taxes Income tax expense (Note 9) NET INCOME FROM CONTINUING OPERATIONS NET INCOME FROM DISCONTINUED OPERATIONS NET INCOME Eamings per common share from continuing operations: Basic (Notes 1 and 12) Diluted (Notes 1 and 12) Eamings per common share from discontinued operations: Basic (Notes 1 and 12) Diluted (Notes 1 and 12) Dividends declared per common share (58) 4,205 932 3,273 3,544 851 2,693 805 2,451 21 $ 3,273 $ 2,693 $ 2,472 A 3.80 3.70 $ $ 3.05 $ 2.97 $ 2.74 2.68 $ A - $ 0.02 0.02 0.81 A A 1.08 $ 0.93 $ The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. NIKE, Inc. Consolidated Statements of Comprehensive Income Year Ended May 31, 2015 2014 3,273 $ 2,693 $ 2013 2,472 $ (32) (In millions) Net income Other comprehensive income (loss), net of tax: Change in net foreign currency translation adjustment) Change in net gains (losses) on cash flow hedges12 Change in net gains (losses) on other 3) Change in release of cumulative translation loss related to Umbro(4) Total other comprehensive income (loss), net of tax TOTAL COMPREHENSIVE INCOME (20) 1,188 38 (161) 4 (7) 12 (8) 83 125 2,597 1.161 4,434 $ (189) 2,504 $ $ (1) Net of tax benefit (expense) of $0 milion, 80 million and $(13) milion, respectively. (2) Net of tax benefit (expense) of $(31) milion, $18 milion and $(22) million, respectively. (3) Net of tax benefit (expense) of $0 million, 80 million and $1 million, respectively (4) Net of tax benefit (expense) of $0 million, 80 million and $47 milion, respectively. The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement NIKE, Inc. Consolidated Balance Sheets May 31, 2015 2014 3,852 $ 2,072 3,358 4,337 389 1,968 15,976 3,011 281 131 2,201 21,600 $ 2.220 2,9222 3,434 3,947 355 818 13,696 2834 282 131 1,651 18,594 $ $ 107 $ 74 An millions) ASSETS Current assets: Cash and equivalents (Note 6) Short-term investments (Note 6) Accounts receivable, net (Note 1) Inventories (Notes 1 and 2) Deferred income taxes (Note 9) Prepaid expenses and other current assets (Notes 6 and 17) Total current assets Property, plant and equipment, net (Note 3) Identifiable intangible assets, net (Note 4) Goodwill (Note 4) Deferred income taxes and other assets (Notes 6, 9 and 17) TOTAL ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt (Note 8) Notes payable (Note 7) Accounts payable (Note 7) Accrued liabilities (Notes 5, 6 and 17) Income taxes payable (Note 9) Total current liabilities Long-term debt (Note 8) Deferred income taxes and other liabilities (Notes 6, 9, 13 and 17) Commitments and contingencies (Note 16) Redeemable preferred stock (Note 10) Shareholders' equity Common stock at stated value (Note 11): Class A convertible - 178 and 178 shares outstanding Class B - 679 and 692 shares outstanding Capital in excess of stated value Accumulated other comprehensive income (Note 14) Retained eamings Total shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY The accompanying Notos to the Consolidated Phancial Statements are an integral part of this statement 2,131 3,951 167 1,930 2.491 432 5.027 6,334 1,079 1,480 1,199 1,544 6,773 5865 1.246 85 4,685 12,707 21,600 $ 4871 10.824 18,594 $ 13343176 NIKE, Inc. Consolidated Statements of Income Year Ended May 31, 2014 2015 2013 $ 30.601 $ 16,534 14,067 3,213 6,679 9,892 27,799 15,353 12,446 3,031 5,735 8,766 25,313 14,279 11,034 2,745 5,051 7,796 (3) 28 33 103 (15) 3,256 (In millions, except per share data) Income from continuing operations: Revenues Cost of sales Gross profit Demand creation expense Operating overhead expense Total selling and administrative expense Interest expense (income), net (Notes 6, 7 and 8) Other (income) expense, net (Note 17) Income before income taxes Income tax expense (Note 9) NET INCOME FROM CONTINUING OPERATIONS NET INCOME FROM DISCONTINUED OPERATIONS NET INCOME Eamings per common share from continuing operations: Basic (Notes 1 and 12) Diluted (Notes 1 and 12) Eamings per common share from discontinued operations: Basic (Notes 1 and 12) Diluted (Notes 1 and 12) Dividends declared per common share (58) 4,205 932 3,273 3,544 851 2,693 805 2,451 21 $ 3,273 $ 2,693 $ 2,472 A 3.80 3.70 $ $ 3.05 $ 2.97 $ 2.74 2.68 $ A - $ 0.02 0.02 0.81 A A 1.08 $ 0.93 $ The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. NIKE, Inc. Consolidated Statements of Comprehensive Income Year Ended May 31, 2015 2014 3,273 $ 2,693 $ 2013 2,472 $ (32) (In millions) Net income Other comprehensive income (loss), net of tax: Change in net foreign currency translation adjustment) Change in net gains (losses) on cash flow hedges12 Change in net gains (losses) on other 3) Change in release of cumulative translation loss related to Umbro(4) Total other comprehensive income (loss), net of tax TOTAL COMPREHENSIVE INCOME (20) 1,188 38 (161) 4 (7) 12 (8) 83 125 2,597 1.161 4,434 $ (189) 2,504 $ $ (1) Net of tax benefit (expense) of $0 milion, 80 million and $(13) milion, respectively. (2) Net of tax benefit (expense) of $(31) milion, $18 milion and $(22) million, respectively. (3) Net of tax benefit (expense) of $0 million, 80 million and $1 million, respectively (4) Net of tax benefit (expense) of $0 million, 80 million and $47 milion, respectively. The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement NIKE, Inc. Consolidated Balance Sheets May 31, 2015 2014 3,852 $ 2,072 3,358 4,337 389 1,968 15,976 3,011 281 131 2,201 21,600 $ 2.220 2,9222 3,434 3,947 355 818 13,696 2834 282 131 1,651 18,594 $ $ 107 $ 74 An millions) ASSETS Current assets: Cash and equivalents (Note 6) Short-term investments (Note 6) Accounts receivable, net (Note 1) Inventories (Notes 1 and 2) Deferred income taxes (Note 9) Prepaid expenses and other current assets (Notes 6 and 17) Total current assets Property, plant and equipment, net (Note 3) Identifiable intangible assets, net (Note 4) Goodwill (Note 4) Deferred income taxes and other assets (Notes 6, 9 and 17) TOTAL ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt (Note 8) Notes payable (Note 7) Accounts payable (Note 7) Accrued liabilities (Notes 5, 6 and 17) Income taxes payable (Note 9) Total current liabilities Long-term debt (Note 8) Deferred income taxes and other liabilities (Notes 6, 9, 13 and 17) Commitments and contingencies (Note 16) Redeemable preferred stock (Note 10) Shareholders' equity Common stock at stated value (Note 11): Class A convertible - 178 and 178 shares outstanding Class B - 679 and 692 shares outstanding Capital in excess of stated value Accumulated other comprehensive income (Note 14) Retained eamings Total shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY The accompanying Notos to the Consolidated Phancial Statements are an integral part of this statement 2,131 3,951 167 1,930 2.491 432 5.027 6,334 1,079 1,480 1,199 1,544 6,773 5865 1.246 85 4,685 12,707 21,600 $ 4871 10.824 18,594 $