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Posted on Sep 06, 2024

Prepare a Vertical Analysis of the Income Statements for Nike, Inc. for the current year ended 5/31/19 and the prior year ended 5/31/18, expressing each

Prepare a Vertical Analysis of the Income Statements for Nike, Inc. for the current year ended 5/31/19 and the prior year ended 5/31/18, expressing each Income Statement item as a percentage of total revenue. (Total Revenue = 100%) Assume there are no preferred shares outstanding.

* Use a spreadsheet program to do this part of the assignment.

* Label the spreadsheet Vertical Analysis Income Statements Nike, Inc.

* List each line item from the Income Statement (from Revenue to Net Income 11 line items in total) in Column A, and the amounts for the two years in Column B (2019) and Column D (2018).

* In Columns C and E, use a formula to convert the amounts in Columns B and D, respectively, to a percentage of the Total Revenue.

NIKE, INC.DATED FINANCIAL CONSOLIDATED STATEMENTS OF CASH FLOWS OR 2019 YEAR ENDED MAY 31, 2018 2017 4,029 $ 1,933 $ 4.240 705 747 706 647 (273) 218 215 325 15 233 27 10 (99) (117) 187 (270) (490) (203) (255) 35 (426) (231) (120) 1,525 5,903 1,515 4,955 (158) 3.846 Dolors in milions) Cash provided by operations: Net income Adiustments to reconcile net income to net cash provided by operations: Depreciation Deferred income taxes Stock-based compensation Amortization and other Net foreign currency adjustments Changes in certain working capital components and other assets and liabilities: (Increase) decrease in accounts receivable (Increase) decrease in inventories (Increase) decrease in prepaid expenses and other current and non-current assets Increase (decrease) in accounts payable, accrued liabilities and other current and non-current liabilities Cash provided by operations Cash provided (used) by investing activities: Purchases of short-term investments Maturities of short-term investments Sales of short-term investments Additions to property, plant and equipment Disposals of property, plant and equipment Other investing activities Cash provided (used) by investing activities Cash used by financing activities: Net proceeds from long-term debt issuance Long-term debt payments, including current portion Increase (decrease) in notes payable Payments on capital lease and other financing obligations Proceeds from exercise of stock options and other stock issuances Repurchase of common stock Dividends common and preferred Tax payments for not share settlement of equity awards Cash used by financing activities Effect of exchange rate changes on cash and equivalents Net increase (decrease) 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: Interest, net of capitalized interest (2.937) (4.783) (5,928) 1.7153,6133,623 2,072 2.496 2,423 (1,119) (1.028) (1,105) (25) 276 (34) (1,008) (264) 1,482 (6) (6) 13 (23) (325) (27) 700 (4.286) (1,332) 327 (17) 489 (3,223) (1.133) (5,293) (129) 217 4,249 4,466 $ (4.254) (1.243) (55) (4.835) 45 441 3,808 4,249 $ 2,148) (20) 670 3,138 3,808 153 $ 125 $ 529 703 Income taxes 160 347 266 300 320 Non-cash additions to property, plant and equipment Dividends declared and not paid accompanying Notes to the Consolidated Financial Statements are an integral part of this statement NIKE, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY TOTAL COMMON STOCK CAPITAL IN ACCUMULATED EXCESS OTHER CLASS A CLASS B OF STATED COMPREHENSIVE RETAINED SHARES AMOUNT SHARES AMOUNT VALUE INCOME (LOS) EARNINGS 353 $ - 1,329 $ 3$ 5,038 $ 318 $ 6,899 $12.958 17 525 525 (24) (189) (3.060) (3,249) 24 (60) (1.159) (1.159) 121 215 (13) 108 215 4,240 4,240 (531) 6,907 $12,407 329 $ - (531) (213) $ 3 $ 1,314 $ 24 (70) 5,710 $ 600 (254) 600 (4,013) (4.267) (1,265) (1,265) (in millions, except per share data) Balance at May 31, 2016 Stock options exercised Conversion to Class B Common Stock Repurchase of Class B Common Stock Dividends on common stock (S0.70 per share) and preferred stock ($0.10 per Share) Issuance of shares to employees, net of shares withheld for employee taxes Stock-based compensation Net income Other comprehensive income (loss) Balance at May 31, 2017 Stock options exercised Repurchase of Class B Common Stock Dividends on common stock ($0.78 per share) and preferred stock ($0.10 per share) Issuance of shares to employees, net of shares withheld for employee taxes Stock-based compensation Net income Other comprehensive income (loss) Redassifications to retained earnings in accordance with ASU 2018-02 (Note 1) Balance at May 31, 2018 Stock options exercised Conversion to Class B Common Stock Repurchase of Class B Common Stock Dividends on common stock ($0.86 per share) and preferred stock ($0.10 per share) Issuance of shares to employees, net of shares withheld for employee taxes Stock-based compensation Net Income Other comprehensive income (loss) Adoption of ASU 2016-16 (Note 1) Adoption of ASC Topic 606 (Note 1) Balance at May 31, 2019 110 218 (28) 82 218 1,933 1,933 104 104 329 $ - 3 $ 6,384 $ 539 17 (92) $ (17) - 3,517 $ 9,812 1.272 $ 18 14 (54) 539 (14) (227) (4,056) (4.283) (1,360) (1,360) 142 323 (3) 139 325 4,029 4,029 323 (507) (507) 23 23 1.643 $ 9.040 315 $ 1,253 $ 3 $ 76161 2 31 $ The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement PART II NIKE, INC. CONSOLIDATED BALANCE SHEETS MAY 31, 2019 2018 4249 4.466 $ 197 4,272 5,622 1,968 349A 5.261 1,130 15,134 4454 285 16,525 4.744 283 154 2,011 23,717 $ 2,509 22,536 (Dollars in milions) ASSETS Current assets: Cash and equivalents Short-term investments Accounts receivable net Inventories Prepaid expenses and other current assets Total current assets Property, plant and equipment, net Identifiable intangible assets, nel Goodwill Deferred income taxes and other assets TOTAL ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt Notes payable Accounts payable Accrued liabilities Income taxes payable Total current liabilities Long-term debt Deferred income taxes and other liabilities Commitments and contingencies (Note 18) Redeemable preferred stock Shareholders' equity Common stock at stated value: Class A convertible-315 and 329 shares outstanding Class B - 1,253 and 1.272 shares outstanding Capital in excess of stated value Accumulated other comprehensive income (loss) Retained earnings Total shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 6 S6 9 336 2612 2279 5,010 3,269 229 150 7,866 6,040 3,464 3.468 3.347 3.216 7,163 231 1.643 9.040 23.717 S 6,384 (92) 3.517 9,812 22,536 $ The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement PART 1 NIKE, INC. CONSOLIDATED STATEMENTS OF INCOME $ fin milions, except per share data) Revenues Cost of sales Gross profit Demand creation expense Operating overhead expense Total selling and administrative expense Interest expense (income), net Other (income) expense, net Income before income taxes Income tax expense NET INCOME Earnings per common share: Basic Diluted Weighted average common shares outstanding: Basic Diluted YEAR ENDED MAY 31, 2019 2018 2017 39,117 $ 36,397 $ 34 35 21,643 20,441 19,038 17.474 15,956 15 312 3.753 3,577 3.341 8,949 7,934 7.222 12,702 11,511 10,563 495459 (78) 66 (196) 4,801 4,325 4,886 72 2,392 646 4,029 $ 1,933 $ 4,240 7 $ $ $ 2.55 $ 249 S 1.19 $ 1.17 $ 2.56 251 1,579.7 1,618.4 1,623.8 1.659.1 1,657.8 1.692.0 The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement ITEM 6. SELECTED FINANCIAL DATA All share and per share amounts are reflective of the two for one stock split that began trading at the split-adjusted price December 24, 2015 FINANCIAL HISTORY 2019 2018 2017 2016 2017 In milions, except per share data and financial ratios Year Ended May 31, $ 39,117 $ 36,397 $ 34,350 $ 32,376 $ 30.01 Revenues 15,956 15,312 14,971 14.067 Gross profit 44.7% 43.8% 44.6% 46.2% Gross margin 48.0% 1,933 4.240 3,760 3.273 Net income Earnings per common share: 2.55 Basic 1.19 2.56 2.21 1.90 2.49 1.17 2.51 2 .16 185 Diluted 1.579.7 1.623.8 1,657.8 1.697.9 1.723 Weighted average common shares outstanding Diluted weighted average common shares outstanding 1,618.4 1,659.1 1.692.0 1,742.5 1,768 Cash dividends declared per common share 0.86 0.78 0.70 0.62 0 5 Cash provided by operations 5,903 4,955 3,846 3,399 4906 At May 31, Cash and equivalents $ 4,466 $ 4,249 $ 3,808 $ 3,138 $ 3,862 Short-term investments 197 996 2,371 2.319 2,072 Inventories 5,622 5,261 5 ,056 4,838 4,337 Working capital 8,659 9 ,094 10,587 9,667 9.255 Total assets 23,717 22,536 23,259 21,379 21,590 Long-term debt 3.464 3.468 3,471 1,993 1,072 Capital lease obligations 60 75 27 15 5 Redeemable preferred stock 0.3 0.3 0.3 0.3 0.3 Shareholders' equity 9,040 9.812 12 407 12.258 12,707 Market capitalization 120,951 114.983 87,084 92.867 87,044 Financial Ratios: Return on equity 42.7% 17.4% 34.4% 30.1% 27.8% Return on assetshop 8.4% 19.0% 17.5% 16.3% Inventory turns 4.0 3.8 3.8 4.0 Current ratio at May 31 L 2.5 29 2.8 2.5 Price Earnings ratio at May 31) 31.0 61.4 21.1 256 27.5 Fica 2018 reflects the impact on the name of the Tax Cuts and Jobs Act. Refer t Consolidated Financial Statements for a n al information h e s h omparing F 2019 es the impact from the adoption of Accounting Standards Update (ASU) No 2014.00 Re Refer to Nole Sum of Sigricant Accounting Policies in the accompanying Notes to the Consored Financial Statement t ro Contracts Custom additional information 2019 reflects the impact from the apoion of ASUN Refer to Nole 2016-16 Income Taxes ( 740 Summary of S a nt Accounting Poices in the accompanying Notes to the Condled Financial Statement for A Omer Than Information 40