refer to the financial statements and answer the questions

hints

13. determine larger proportion of total liabilities - current or non-current. 14. amount owed to creditors for expenses already incurred. 15. amount of cash paid in advance for goods and services. 16. financial position date.

2:12 PM Wed Apr 15 39%). A 51.04cdn.com PART II NIKE, Inc. Consolidated Statements of Income in mWors, except per share data) Revenues Cost of sales Gross profit Demand creation expense Operating overhead expense Total saling and administrative expense Interest expense (income), net Other expense income), net Income before income taxes Income tax expense NET INCOME Year Ended May 31, 2018 2017 36,397 S 34,360 $ 20,441 19.038 15,956 15,312 3,577 3,341 7,934 7.222 11,511 10.563 59 (196) 4,325 4,886 2,392 646 1,933 S 4.240 $ 2016 32,376 17.405 14,971 3,278 7,191 10,469 19 (140) 4.623 863 3.760 $ Earnings per common share: Basic Diluted $ $ 1.19 1.17 S S 2.56 2.51 $ $ 2.21 2.16 $ 0.78 S 0.70 $ 0.62 Dividends declared per common share The accompanying Notes to me Consolated Financial Statements are an integral part of this statement 2:12 PM Wed Apr 15 39% ). 51.04cdn.com NIKE, INC. 2018 Annual Report and Notice of Annual Meeting 95 PART II NIKE, Inc. Consolidated Balance Sheets May 31, 2018 2017 4,249 $ 996 3,498 5,261 1,130 15,134 4,454 285 3,808 2,371 3,677 5,055 1,150 16,061 3,989 283 139 2,787 23,259 154 2,509 22,536 S $ Min m ors 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, net Goodwil Deferred income taxes and other assets TOTAL ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debat Notes payable Accounts payable Accrued liabilities Income taxes payable Total current liabilities Long-term debt Deferred income taxos and other liabilities Commitments and contingencies (Note 15) Redeemable preferred stock Shareholders' equity: Common stack 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 earings Total shareholders' eauity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 338 2.279 3,269 150 6,040 3,468 3,216 325 2,048 3,011 84 5,474 3,471 1,907 6,384 192) 3,517 9,812 22,536 $ 5,710 (213) 6,907 12,407 23,259 S The accom i Notes to the Consociated Financial Statements se en integracart of this statement 2:12 PM Wed Apr 15 39%). 51.04cdn.com GA 46 of 83 PART II NIKE, Inc. Consolidated Statements of Cash Flows Year Ended May 31, 2017 2018 2016 1,933 S 4.240 $ 3,760 649 747 647 218 706 (273) 215 (80) 236 10 13 (99 (117) 98 80 187 (255) 35 (428) (231) (120) (590) (161) 1,515 4,955 (159) 3.846 15961 3,399 14,783) 3,613 2,496 15.928) 3,623 2,423 (5.367 2.924 2.386 150 (1.143) 10 (1.028) (1.105) 13 A monsi 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 Docrease increase) in prepaid exoenses and other current and non current assets Increase (decrease in accounts payable, accrued liablities and other current and non-current liabilities Cash provided by onerations Cash provided (used) by investing activities: Purchases of short-term investments Malurilies of short-lerm 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 (uso by investing activities Cash used by financing activities: Nat proceeds from long-term debt issuanca 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 idecrease) in cash and equivalents Cash and equivalents, baginning 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 ackditions to properly. plant and equipment Dividends declared and not paid The company Nales la the Congo Frenc Salarys are an expert ons slalom . FORM 10-K 125 276 (1,009) (1.034) 1.482 16 981 (106) (67) 13 (23) 733 14,254) (1.2431 155 14.835) 45 441 3,808 4,249 327 (17) 489 (3.223) 11,133) 129) (2.148) 120) 670 3.138 3,808 507 13,238) (1,022) 1221 (2,974) (105) 714) S $ 3,138 S 125 529 294 320 98 $ 703 205 300 70 748 252 271 NIKE INC R Anualei Mate Anal Microlit 97 2:12 PM Wed Apr 15 39%). 51.04cdn.com NIKE, INC. 2018 Annual Report and Notice of Annual Meeting 97 47 of 83 PART II NIKE, Inc. Consolidated Statements of Shareholders' Equity Common Stock Class A Class B Shares Amount Shares Amount 355 $ - 1,357 S 3 22 (2) - 2 (55) Capital in Excess of Stated Value $ 4,165 680 Accumulated Other Comprehensive Income $ 1,246 Retained Earnings S 7,293 $ Total 12,707 680 (148) (3,090) 3,238) (1,053) 1,053) 105 236 236 3,760 1928) 318 3,760 1928) 12,258 525 353 $ - 3 $ $ S 6,899 $ 5,038 525 (24) - 1,329 S 17 24 (60) (189) (3,060) (3,249) in Wons, except per share datal Balance at May 31, 2015 Stock options exercised Conversion to Class B Common Stock Repurchase of Class B Common Stock Dividends on common stock (S0.62 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 (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 foss) Balance at May 31, 2017 Stock options exercised Conversion to Class B Common Stock Repurchase of Class B Common Stock Dividends on common stock (S0.78 per sharel and preferred stock (S0.10 per share! Issuance of shares to employees, net of shares withheld for employee taxes Stock-based compensation Net income Other comprehensive income foss) Reclassifications to retained earnings in accordance with ASU 2018-02 Balance at May 31, 2018 (1,159) (1,159) 121 215 (13) 4,240 108 215 4,240 (531) 12,407 600 1531) (213) 329 $ - S 3 $ $ $ 6,907 $ 1,314 24 5,710 800 (70) (254) (4,013) (4,267) (1,265) (1,265) 1281 110 218 82 218 1,933 104 1,933 104 17 (92) (17) 3,517 $ 329 $ - 1,272 S 3 $ 6,384 $ $ 9,812 The acconcerty Notes to the Consulted Franca Statements are an integral cart of this statement Total advertising and promotion expenses, which the Company refers to as Demand creation expense, were $3,577 million, $3,341 million and $3,278 million for the years ended May 31, 2018, 2017 and 2016, respectively. Prepaid advertising and promotion expenses totaled $730 million and $658 million at May 31, 2018 and 2017, respectively, of which $359 million and $311 million, respectively, was recorded in Prepaid expenses and other current assets, and $371 million and $247 million, respectively, was recorded in Deferred income taxes and other assets, depending on the period to which the prepayment applies. Inventory Valuation Inventories are stated at lower of cost and net realizable value, and valued on either an average or a specific identification cost basis. In some instances, we ship product directly from our supplier to the customer, with the related inventory and cost of sales recognized on a specific identification basis. Inventory costs primarily consist of product cost from the Company's suppliers, as well as inbound freight, import duties, taxes, insurance and logistics and other handling fees. Operating Overhead Expense Operating overhead expense consists primarily of wage and benefit-related expenses, research and development costs, as well as other administrative expenses, such as rent, depreciation and amortization, professional services, meetings and travel. Property, Plant and Equipment and Depreciation Property, plant and equipment are recorded at cost. Depreciation is determined on a straight-ine basis for land improvements, buildings and leasehold improvements over 2 to 40 years and for machinery and equipment over 2 to 15 years. Depreciation and amortization of assets used in manufacturing, warehousing and product distribution are recorded in Cost of sales. Depreciation and amortization of all other assets are recorded in Operating overhead expense. Cash and Equivalents Cash and equivalents represent cash and short-term, highly liquid investments, that are both readily convertible to known amounts of cash, and so near their maturity they present insignificant risk of changes in value because of changes in interest rates, 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 the Company has the ability and positive intent to hold to maturity are carried at amortized cost. At May 31, 2018 and 2017, the Company did not hold any short-term investments classified as trading or held-to-maturity. At May 31, 2018 and 2017, 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 Software Development Costs Intemal Use Software: Expenditures for major software purchases and software developed for internal use are capitalized and amortized over a 2 to 12-year period on a straight-line basis. The Company's policy provides for the capitalization of external direct costs of materials and services associated with developing or obtaining internal use computer software. In addition, the Company also capitalizes certain payroll and payroll-related costs for employees who are directly associated with internal use computer software projects. The amount of capitalizable payroll costs with respect to these employees is limited to the time directly spent on such projects. Costs associated with preliminary project stage activities, training, maintenance and all other post-implementation stage activities are expensed as incurred. Computer Software to be sold, Leased or Otherwise Marketed: Development costs of computer software to be sold, leased or otherwise marketed as an integral part of a product are subject to capitalization beginning when a product's technological feasibility has been established and ending when a product is available for general release to customers. In most instances, the Company's products are released soon after technological feasibility has been established. Therefore, software development costs incurred subsequent to achievement of technological feasibility are usually not significant, and generaly most software development costs have been expensed as incurred. 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. Refer to Note 6 - Fair Value Measurements for more information on the Company's short-term investments. Allowance for Uncollectible Accounts Receivable Accounts receivable, nel consist primarily of amounts receivable from customers. The Company makes ongoing estimates relating to the collectability of its accounts receivable and maintains an allowance for estimated losses resulting from the inability of its customers to make required payments. In determining the amount of the allowance, the Company considers historical levels of credit losses and makes judgments about the Impairment of Long-Lived Assets The Company reviews the carrying value of long-lived assets or asset groups to be used in operations whenever events or changes in circumstances indicate the carrying amount of the assets might not be recoverable. Factors that would necessitate an impairment assessment include a significant adverse change in the extent or manner in which an asset is used, a significant adverse change in legal factors or the business climate that could affect the value of the asset or a significant decline in the observable market value of an asset, among others. If such facts indicate a potential impairment, the Company would assess the recoverability of an asset group by determining if the carrying value of the asset group exceeds the sum of the projected undiscounted cash flows expected to result from the use and eventual disposition of the assets over the remaining economic life of the primary asset in the asset group. If the recoverability test indicates that the carrying value of the asset group is not recoverable, the Company will estimate the fair value of the asset group using appropriate valuation methodologies, which would typically include an estimate of discounted cash flows. Any impairment would be measured as the difference between the asset group's carrying amount and its estimated fair value. evaluations. Accounts receivable with anticipated collection dates greater than 12 months from the balance sheet date and related allowances are considered non-current and recorded in Deferred income taxes and other assets. The allowance for uncollectible accounts receivable was $30 million and $19 million at May 31, 2018 and 2017, respectively. 2:13 PM Wed Apr 15 39%) A $1.04cdn.com PART II modified retrospective approach with the cumulative effect of nitaly applying the new standard recognized in retained earnings at the date of adoption. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overal /Subtopic 825-101: Recognition and Measurement of Financial Assets and Francia Labies. The updated guidance enhances the reporting model for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation and disclosure. The update to the standard is effective for the Company beginning June 1, 2018. The Company does not expect the adoption to have a material impact on the Consolidated Financial Statements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers Topic 906), which replaces existing revenue recognition guidance. The updated guidance requires companies to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires reporting companies to disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company wil adopt the standard on June 1, 2018 using a While the Company does not expect the adoption of this standard to have a material impact on the Company's net Revenues in the Consolidated Statements of Income, revenues for certain wholesale transactions and substantialy al digital commerce sales will be recognized upon shipment rather than upon delivery to the customer. Accordingly, the Company will record a cumulative effect adjustment increasing Retained earnings by approximately $23 milion on June 1, 2018 Additionaly provisions for post-invoice sales discounts, retums and miscellaneous claims will be recognized as accrued liabiities rather than as reductions to Accounts receivable, net; and the estimated cost of inventory associated with the provision for sales returns will be recorded within Prepaid expenses and other current assets on the Consolidated Balance Sheels. The remaining provisions of the standard are not expected to have a material impact on the Company's Consoldated Financial Statements. NOTE 2 Inventories Inventory balances of $5,281 milion and $5,065 milion at May 31, 2019 and 2017, respectively, were substantially al finished goods. NOTE 3 Property, plant and Equipment Property, plant and equipment, net included the following: 285 in mans) Land and improvements Buildings Machinery, equipment and internal-use software Leasehold improvements Construction in process Total property, plant and equipment, gross Less accumulate depreciation TOTAL PROPERTY, PLANT AND EQUIPMENT, NET As of May 31, 2018 2017 331 $ 2,195 1,564 4,230 3,867 1.494 1,484 641 758 8.891 7,959 4.437 3,969 4,454 S 3,989 $ Captaized interest was not material for the years onded May 31, 2018, 2017 and 2016. NOTE 4 Identifiable Intangible Assets and Goodwill loentifiable intangible assets, net consist of indefinite-lived trademarks, which are not subject to amortization, and acquired trademarks and other intangiole assets, which are subject to amortization. The following table summarizes the Company's loentifiable irtengule assets, ner balances as of May 31, 2018 and 2017: in millions As of May 31, 2018 2017 Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Amount Amortization Amount Amount Amortization Amount $ 22 $ 18 S 4 $ 19 $ 17 $ 281 $ 303 $ 18 S 2 85 $ 300 S 17 $ 283 Acquired trademarks and other Indefinite-lived trademarks IDENTIFIABLE INTANGIBLE ASSETS, NET Goodwi was $154 milion and $139 milion at May 31, 2018 and 2017, respectively, of which $66 milion was included in the Converse segment for both periods. The remaining amounts were included in Global Brand Divisions for segment reporting purposes. There were no accumulated impaiment balances for goodwill as of either pariod and 104 Question 13 When Nike collects an accounts receivable from a customer: O net income does not change. On total assets increase. Oc retained earnings increase. Id accounts payable decreases. O Question 14 Nike's most recent income statement shows the company's results of operations: Oa At December 31, 2018. Ob For year ended December 31, 2018. For the year ended May 31, 2018. o Od At May 31, 2018. Question 15 Nike's earned revenue from both cash and credit sales for its most recent year end was (in millions): $15,956. O ro $36,397. O O c. $1,933. Od $3,498. Question 16 How much did Nike's revenues and gains exceed its expenses and losses during the most recent reporting period (in millions)? Oa $15,956. b. $36,397. Oc. $1,933. O d. $3,498