On a financial statement, the term Cash and equivalents or Cash and cash equivalents includes more than just cash on hand. Checking accounts, savings accounts, and even some very short-term investments are also included in this total. Nikes financial statement in Appendix B on page B-7 shows the total cash and equivalents for Nike for each year.Published financial statements include notes that explain some of the titles and amounts used in the statements. Note 1 for Nikes financial statements begins on page B-9.

1. List the amount of Nikes cash and equivalents for 2016 and 2015.
2. Look at Note 1 and list what Nike considers to be cash and equivalents.

Note 1 Summary of Significant Accounting Policies

Description of Business

NIKE, Inc. is a worldwide leader in the design, development and worldwide marketing and selling of athletic footwear, apparel, equipment, accessories and services. NIKE, Inc. portfolio brands include the NIKE Brand, Jordan Brand, Hurley and Converse. The NIKE Brand is focused on performance athletic footwear, apparel, equipment, accessories and services across a wide range of sport categories, amplified with sport-inspired sportswear products carrying the Swoosh trademark as well as other NIKE Brand trademarks. The Jordan Brand is focused on athletic and casual footwear, apparel and accessories, using the Jumpman trademark. Sales of Jordan Brand products are reported as a separate category within the respective NIKE Brand geographic operating segments. The Hurley brand is focused on surf and action sports and youth lifestyle footwear, apparel and accessories, using the Hurley trademark. Sales of Hurley brand products are included within the NIKE Brand Action Sports category and within the NIKE Brands North America geographic operating segment, respectively. Converse designs, distributes, markets and sells casual sneakers, apparel and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron and Jack Purcell trademarks. In some markets outside the U.S., these trademarks are licensed to third parties who design, distribute, market and sell similar products. Operating results of the Converse brand are reported on a stand-alone basis.

Basis of Consolidation

The Consolidated Financial Statements include the accounts of NIKE, Inc. and its subsidiaries (the Company). All significant intercompany transactions and balances have been eliminated.

On November 19, 2015, the Company announced a two-for-one split of both NIKE Class A and Class B Common Stock. The stock split was in the form of a 100 percent stock dividend payable on December 23, 2015 to shareholders of record at the close of business on December 9, 2015. Common stock began trading at the split-adjusted price on December 24, 2015. All share and per share amounts presented reflect the stock split.

Reclassifications

Certain prior year amounts have been reclassified to conform to fiscal 2016 presentation.

Revenue Recognition

Wholesale revenues are recognized when title and the risks and rewards of ownership have passed to the customer, based on the terms of sale. This occurs upon shipment or upon receipt by the customer depending on the country of the sale and the agreement with the customer. Retail store revenues are recorded at the time of sale and online store revenues are recorded upon delivery to the customer. Provisions for post-invoice sales discounts, returns and miscellaneous claims from customers are estimated and recorded as a reduction to revenue at the time of sale. Post-invoice sales discounts consist of contractual programs with certain customers or discretionary discounts that are expected to be granted to certain customers at a later date. Estimates of discretionary discounts, returns and claims are based on (1) historical rates, (2) specific identification of outstanding claims and outstanding returns not yet received from customers and (3) estimated discounts, returns and claims expected, but not yet finalized with customers. As of May 31, 2016 and 2015, the Companys reserve balances for post-invoice sales discounts, returns and miscellaneous claims were $789 million and $724 million, respectively.

Cost of Sales

Cost of sales consists primarily of inventory costs, as well as warehousing costs (including the cost of warehouse labor), third-party royalties, certain foreign currency hedge gains and losses and research, design and development costs. Outbound shipping and handling costs are expensed as incurred and included in Cost of sales.

Operating Overhead Expense

Operating overhead expense consists primarily of payroll and benefit related costs, rent, depreciation and amortization, professional services and meetings and travel.

Demand Creation Expense

Demand creation expense consists of advertising and promotion costs, including costs of endorsement contracts, television, digital and print advertising, brand events and retail brand presentation. Advertising production costs are expensed the first time an advertisement is run. Advertising communication costs are expensed when the advertisement appears. Costs related to brand events are expensed when the event occurs. Costs related to retail brand presentation are expensed when the presentation is completed and delivered.

A significant amount of the Companys promotional expenses result from payments under endorsement contracts. Accounting for endorsement payments is based upon specific contract provisions. Generally, endorsement payments are expensed on a straight-line basis over the term of the contract after giving recognition to periodic performance compliance provisions of the contracts. Prepayments made under contracts are included in Prepaid expenses and other current assets or Deferred income taxes and other assets depending on the period to which the prepayment applies.

Certain contracts provide for contingent payments to endorsers based upon specific achievements in their sports (e.g., winning a championship). The Company records demand creation expense for these amounts when the endorser achieves the specific goal.

Certain contracts provide for variable payments based upon endorsers maintaining a level of performance in their sport over an extended period of time (e.g., maintaining a specified ranking in a sport for a year). When the Company determines payments are probable, the amounts are reported in Demand creation expense ratably over the contract period based on our best estimate of the endorsers performance. In these instances, to the extent that actual payments to the endorser differ from the Companys estimate due to changes in the endorsers performance, increased or decreased demand creation expense may be recorded in a future period.

Certain contracts provide for royalty payments to endorsers based upon a predetermined percent of sales of particular products. The Company expenses these payments in Cost of sales as the related sales occur. In certain contracts, the Company offers minimum guaranteed royalty payments. For contracts for which the Company estimates it will not meet the minimum guaranteed amount of royalty fees through sales of product, the Company records the amount of the guaranteed payment in excess of that earned through sales of product in Demand creation expense uniformly over the contract term.

Through cooperative advertising programs, the Company reimburses retail customers for certain costs of advertising the Companys products. The Company records these costs in Demand creation expense at the point in time when it is obligated to its customers for the costs. This obligation may arise prior to the related advertisement being run.

Total advertising and promotion expenses were $3,278 million, $3,213 million and $3,031 million for the years ended May 31, 2016, 2015 and 2014, respectively. Prepaid advertising and promotion expenses totaled $540 million and $455 million at May 31, 2016 and 2015, respectively, and were recorded in Prepaid expenses and other current assets and Deferred income taxes and other assets depending on the period to which the prepayment applies.

Cash and Equivalents

Cash and equivalents represent cash and short-term, highly liquid investments, including commercial paper, U.S. Treasury, U.S. Agency, money market funds, time deposits and corporate debt securities with maturities of 90 days or less at the date of purchase.

Short-Term Investments

Short-term investments consist of highly liquid investments, including commercial paper, U.S. Treasury, U.S. Agency, time deposits and corporate debt securities, with maturities over 90 days at the date of purchase. Debt securities that the Company has the ability and positive intent to hold to maturity are carried at amortized cost. At May 31, 2016 and 2015, the Company did not hold any short-term investments that were classified as trading or held-to-maturity.

At May 31, 2016 and 2015, Short-term investments consisted of available-for-sale securities. Available-for-sale securities are recorded at fair value with unrealized gains and losses reported, net of tax, in Accumulated other comprehensive income, unless unrealized losses are determined to be other than temporary. Realized gains and losses on the sale of securities are determined by specific identification. The Company considers all available-for-sale securities, including those with maturity dates beyond 12 months, as available to support current operational liquidity needs and therefore classifies all securities with maturity dates beyond 90 days at the date of purchase as current assets within Short-term investments on the Consolidated Balance Sheets.

Year Ended May 31, 2016 2015 2014 5 3.7605 3.2735 2003 649 130 236 13 98 606 (1130 191 43 424 519 11 177 68 56 30 1590 (61) 1889 3.096 210 620 11:44 1,237 4.680 298 SOS 210 525 3.013 5.367 2924 2,356 150 IS.3861 3932 1.126 14.936 3658 2.216 (150 1960 3 1880 In million Cash provided by operations Net Income Income charges for not affecting cash Depreciation Deferred income Stock-based compensation Amortation and other Net foreign currency adjustments Changes in certain working capital components and other niets and liabilities Decrease increase in accounts receivable Increase in inventones Increase in prepaid expenses and other current asset Decreased increase in accounts payable, accrued liabilities and income taxes payable Cash provided by operions Cash used by investing activities: Purchases of short-term investments Maturities of short-term investments Sales of short term investments Investments in reverse repurchase agreements Additions to property, plast and equipment Disposals of property, plant and equipment Decrease increased in other assets, net of other lates Cash used by testing activities Cash used by financing activities: Net proceeds from long term dette Long term debt payments, including current portion Decree increase in notes payable Payments on capital este obligations Proceeds from exercise of stock option and other stock inom Excess tax benefits from share-based payment arrangements Repurchase of common stock Dividends-common and preferred Cashed by financing activities Elect of exchange rate changes on cash and events Net decrease increase in cash and equivalent Cash and equivalents, beginning of year CASH AND EQUIVALENTS, END OF YEAR Supplemental disclosure of cash flow information: Cash paid during the you for Interest, net of capitale interest Income taxes Non-cash addition to property, plant and equipment Dividends declared and not paid 10 6 11.030 (125 11.2017 981 75 167 os 507 281 3.238 11.022 12,671) 1639 19 514 218 2,534 1899 2.790 183 1632 2.220 3.852 5 383 132 2.628 099 0.914 014 3.852 3.138 5 (1.117 3337 2.220 $ $ 53 $ 10$ 748 252 271 1.262 206 240 53 856 167 200 The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement