Ratios: asset turnover and return on total assets You will use the NIKE financial statements in appendix C for these ratios The formula for asset turnover = sales (revenues) / average total assets Average total assets is the sum of the beginning and ending total assets added together and then divided by 2. The beginning total assets for 5/31/18 is the ending total assets for 5/31/17. The beginning total assets for 5/31/17 is 21,379. Round the average total assets to the nearest tenth before dividing into sales. Then round the ratio tp the nearest tenth. 5/31/18 ratio 5/31/17 ratio This ratio measures how effectively a company uses its assets. The higher the number, the more efficiently the company is using its assets to generate sales. Comment on NIKEs profitability from their assets between the two years. The formula for return on total assets is: Net income + interest expense Average total assets Average total assets is the sum of the beginning and ending total assets added together and then divided by 2. The beginning total assets for 5/31/18 is the ending total assets for 5/31/17. The beginning total assets for 5/31/17 is 21,379. Round the average total assets to the nearest tenth before dividing into net income + interest expense. Then round the ratio to the nearest tenth of a percent. This ratio is expressed as a percentage and measures the profitability of totals assets without considering how they are financed. 5/31/18 ratio 5/31/17 ratio Comment on NIKEs profitability from their assets between the two years. NIKE, Inc. Consolidated Statements of Income (In millions, 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 expense (income), net Income before income taxes Income tax expense NET INCOME Earnings per common share: Basic Diluted Dividends declared per common share The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. (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 hedges Change in net gains (losses) on other Total other comprehensive income (loss), net of tax TOTAL COMPREHENSIVE INCOME The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. (In millions) ASSETS Current assets: Cash and equivalents Short-term investments Accounts receivable, net Inventories von Prepaid expenses and other current assets Total current assets Total current Property, plant and equipment, net Property, Identifiable intangible assets, net Goodwill Scoawi Deferred income taxes and other assets TOTAL ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt Notes payable NIKE, Inc. Consolidated Balance Sheets Accounts payable Accrued liabilities Income taxes payable Total current liabilities Long-term debt Deferred income taxes and other liabilities Commitments and contingencies (Note 15) Redeemable preferred stock Shareholders' equity: Common stock at stated value: Class A convertible - 329 and 329 shares outstanding Class B 1,272 and 1,314 shares outstanding Capital in excess of stated value $ Accumulated other comprehensive loss Retained earnings $ Total shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ $ $ $ $ 2018 NIKE, Inc. Consolidated Statements of Comprehensive Income 36,397 $ 20,441 15,956 3,577 7,934 11,511 4,325 2,392 1,933 $ 2018 Year Ended May 31, 2017 1.19 $ 1.17 $ 0.78 $ 54 66 $ 1,933 $ $ $ 104 2,037 $ (6) S 76 34 Year Ended May 31, 2017 4,240 $ 2018 1,130 1,130 34,350 $ 19,038 15,312 3,341 7,222 10,563 15,134 0,104 4,454 285 154 59 (196) 4,886 646 4,240 $ 4,249 $ 996 3,498 5,261 May 31, 2,279 3,269 150 2.56 $ 2.51 $ 2,509 22,536 $ 6,040 3,468 3,216 3 6,384 (92) 3,517 0.70 $ 16 (515) (32) (531) 3,709 $ 6 $ 336 2016 9,812 22,536 $ 32,376 17,405 14,971 3,278 7,191 10,469 19 (140) 4,623 863 3,760 2017 2016 2.21 2.16 3,760 0.62 (176) (757) 5 (928) 2,832 3,808 2,371 3,677 16,061 10,00 5,055 3,099 1,150 3,989 3,309 283 139 2,787 23,259 6 325 2,048 3,011 84 5,474 3,471 1,907 6,907 3 5,710 (213) 12,407 23,259 NIKE, Inc. Consolidated Statements of Cash Flows (In millions) Cash provided by operations: Net income Adjustments 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: Decrease (increase) in accounts receivable (Increase) in inventories Decrease (increase) 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 Investments in reverse repurchase agreements 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 net 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 ||||| Income taxes Non-cash additions to property, plant and equipment Dividends declared and not paid The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. 9 69 2018 Year Ended May 31, 2017 1,933 $ 747 647 218 27 (99) 187 (255) 35 1,515 4,955 (4,783) 3,613 2,496 (1,028) 3 (25) 276 (6) 13 (23) 733 (4,254) (1,243) (55) (4,835) 45 441 3,808 4,249 $ 125 $ 529 294 320 4,240 $ 706 (273) 215 10 (117) (426) (231) (120) (158) 3,846 (5,928) 3,623 2,423 (1,105) 13 (34) (1,008) 1,482 (44) 327 (17) 489 (3,223) (1,133) (29) (2,148) (20) 670 3,138 3,808 S 98 $ 703 266 300 2016 3,760 649 (80) 236 13 98 60 (590) (161) (586) 3,399 (5,367) 2,924 2,386 150 (1,143) 10 6 (1,034) 981 (106) (67) (7) 507 (3,238) (1,022) (22) (2,974) (105) (714) 3,852 3,138 70 748 252 271 NIKE, Inc. Consolidated Statements of Shareholders' Equity (In millions, except per share data) Balance at May 31, 2015 Stock options exercised Conversion to Class B Common Stock Repurchase of Class B Common Stock Dividends on common stock ($0.62 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, 2016 Stock options exercised Conversion to Class B Common Stock Repurchase of Class B Common Stock Dividends on common stock ($0.70 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 Conversion to Class B Common Stock 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 comprobonci in income (ona) Common Stock Class A Class B Amount Shares Amount $ 1,357 $ 3 22 2 (55) Shares 355 (2) 353 (24) $ 329 $ - - 3 1,329 17 24 (60) 1,314 24 (70) 4 $ $ Other comprehensive income (loss) Reclassifications to retained earnings in accordance with ASU 2018-02 Balance at May 31, 2018 329 $ 1,272 The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. 3 Capital in Excess Accumulated Other of Stated Comprehensive Retained Value Income $ 4,165 $ 680 (148) 105 236 $5,038 525 (189) 121 215 3 $5,710 600 (254) 110 218 $ $ $ 3 $6,384 $ 1,246 $ Earnings Total (928) 318 $ (531) (213) $ 104 104 17 (92) $ 7,293 $12,707 680 (3,090) (1,053) (11) 3,760 (3,060) (928) 6,899 $ 12,258 525 (1,159) (13) 4,240 (4,013) (3,238) (1,265) (28) (1,053) 94 236 3,760 1,933 - (3,249) (531) 6,907 $12,407 600 (1,159) 108 215 4,240 (4,267) (17) 3,517 $ (1,265) 82 218 1,933 104 104 9,812