Operating Section of Statement of Cash Flows $($Indirect Method$)$

Assume following are the income statement and balance sheet for Nike for the year ended May $31,2012,$ and a forecasted income statement and balance sheet for $2013.$

Income Statement

$($$ millions$)2012$ actual $2013$ Est.

Revenues $ $18,627\mathrm{.}0$ $ $21,503\mathrm{.}0$

Cost of sales $10,239\mathrm{.}611,689\mathrm{.}0$

Gross margin $8,387\mathrm{.}49,814\mathrm{.}0$

Selling and administrative expense $5,953\mathrm{.}76,801\mathrm{.}0$

Operating profit $2,433\mathrm{.}73,013\mathrm{.}0$

Interest income, net $77\mathrm{.}177\mathrm{.}1$

Other $($expense$)$ income, net $(7\mathrm{.}9)(7\mathrm{.}9)$

Income before income taxes $2,502\mathrm{.}93,082\mathrm{.}2$

Income taxes $619\mathrm{.}5683\mathrm{.}0$

Net income $ $1,883\mathrm{.}4$ $ $2,399\mathrm{.}2$

Balance Sheet

$($$ millions$)2012$ actual $2013$ Est.

Assets

Cash and equivalents $ $2,122\mathrm{.}9$ $ $3,325\mathrm{.}4$

Short$-$term investments $642\mathrm{.}2642\mathrm{.}2$

Accounts receivable, net $2,795\mathrm{.}33,088\mathrm{.}0$

Inventories $2,438\mathrm{.}42,770\mathrm{.}0$

Deferred income taxes $227\mathrm{.}2259\mathrm{.}0$

Prepaid expenses and other current assets $613\mathrm{.}3780\mathrm{.}0$

Total current assets $8,839\mathrm{.}310,864\mathrm{.}6$

Property, plant and equipment$*4,103\mathrm{.}04,613\mathrm{.}0$

Accumulated depreciation $(2,211\mathrm{.}9)(2,556\mathrm{.}9)$

Property, plant and equipment, net $1,891\mathrm{.}12,056\mathrm{.}1$

Goodwill and other current assets $1,191\mathrm{.}91,152\mathrm{.}9$

Deferred income taxes and other assets $520\mathrm{.}4594\mathrm{.}0$

Total Assets $ $12,442\mathrm{.}7$ $ $14,667\mathrm{.}6$

Liabilities and Equity

Current portion of long$-$term debt $ $6\mathrm{.}3$ $ $31\mathrm{.}3$

Notes payable $177\mathrm{.}7139\mathrm{.}7$

Accounts payable $1,287\mathrm{.}61,460\mathrm{.}0$

Accrued liabilities $1,761\mathrm{.}91,973\mathrm{.}0$

Income taxes payable $88\mathrm{.}0190\mathrm{.}0$

Total current liabilities $3,321\mathrm{.}53,794\mathrm{.}0$

Long$-$term debt $441\mathrm{.}1363\mathrm{.}8$

Deferred income taxes and other liabilities $854\mathrm{.}51,021\mathrm{.}0$

Total liabilities $4,617\mathrm{.}15,178\mathrm{.}8$

Redeemable preferred stock $0\mathrm{.}30\mathrm{.}3$

Common stock $2\mathrm{.}82\mathrm{.}8$

Capital in excess of stated value $2,497\mathrm{.}82,497\mathrm{.}8$

Accumulated other comprehensive income $251\mathrm{.}4251\mathrm{.}4$

Retained earnings $5,073\mathrm{.}36,736\mathrm{.}5$

Stockholders' equity $7,825\mathrm{.}69,488\mathrm{.}8$

Total liabilities and equity $ $12,442\mathrm{.}7$ $ $14,667\mathrm{.}6$

$*$ Gross property, plant and equipment and accumulated depreciation are inserted in the balance sheet; both are taken from footnotes to the financial statements.

Prepare the net cash flows from operating activities section of a forecasted statement of cash flows for $2013$ using the indirect method. Treat current and noncurrent deferred tax assets and liabilities as operating. Operating expenses $($such as Cost of sales and Selling and administrative expense$)$ for $2013$ include estimated depreciation expense of $$369$ million and amortization expense of $$39$ million. Estimated $2013$ retained earnings includes dividends of $$467$ million.

Enter answers using one decimal place as shown in the above financial statements.

Use negative signs with answers to show a decrease in cash.

Nike, Inc.

STATEMENT OF CASH FLOWS $($$ MILLIONS$)$

Forecasted FOR YEAR ENDED May $31,2013$

Net income Answer

Add $($Deduct$)$ Items to Convert Net Income to Cash Basis

Depreciation Answer

Amortization Answer

Accounts receivable Answer

Inventories Answer

Deferred Income taxes Answer

Prepaid expenses and other current assets Answer

Deferred income taxes and other assets Answer

Accounts payable Answer

Accrued liabilities Answer

Income taxes payable Answer

Deferred income taxes and other liabilities Answer

Net cash flow from operating activities Answer