Reviewing the Financial Statements of Nike, Ine Naine, leading manufacturer and marketer of sport and fashion footweincorpored 106 and headquartered in Beaverton, Oregon, its brand name has become almost universal delivering sales of over$18.5 bilion by 2004 and making it the age or of the food apparul in the world, with operations in 180 countries. Nes top-selling product categories are running, basketball and cross-training shoes out two market shoes designed for tornis, golf cour, baseball football, bicycling, volleyball wrestling cheerleading skateboarding, hiking, and outdoor activity Many of its products we are in the Nike was a hot stock trading at a PE and a PiB ratio. 1 in mid-1900 By2008. PIE ratio had fallen to 16ansiratio to 3.8. its stock price raseduring the busting of the bubble from 520i 20000 $40in 2004 We will spend considerable time in the book analyzing and waing Ne The Build Your Own Analysis Product (BYOAP) on the Web site tracks from 1996 2006. The 2000 financial statements and comparative 2007 and 2006 sements that follow introduce you to firm. You can find these financial statements in Ne' 10 Kreport for 2008 on the SECS EDGAR Website, which is accessible through the address given in Exercise 2, or through links on the book's Webse Browse the entire 10-kas an example of what a typical OK books like. Look at the footnotes referred to in the woments below. Read the managements discussion of the business and get a sense of the business model Look who of the firm's Website www.nike.com. Examine the financial statements in Exhibit 23andustootestyour basicknowledge of accounting. The questions tha follow will help you focus on the pertinent features A Using the numbers in the financial statements, show that the following accounting relations hold in Nike 2008 statements Shareholders' equily Assets Net income Revenue - Expenses . Cash from operations -Cash from investment +Cash from financing Effect of unchange rate - Change in cash and cash equivalents & What are the components of other comprehensive income for 2008? Show that the following accounting relation holds Comprehensive income Not income Other comprehensive income Calculate the net payout to shareholders in 2008 from the Statement of Shareholders Equity Explain how revenue is recognized Calcuto the following for 2008 Gross Margin, Elective Tax Rato, EBIT. EBITDA and the Sales Growth Rate D E Reviewing the Financial Statements of Nike, Inc. Nike, Inc., is a leading manufacturer and marketer of sport and fashion footwear. Incorporated in 1968 and headquartered in Beaverton, Oregon, its brand name has become almost universal, delivering sales of over$18.5 billion by 2008 and making it the largest seller of athletic footwear and apparel in the world, with operations in 180 countries. Nike's top-selling product categories are running, basketball, and cross-training shoes, but it also markets shoes designed for tennis, golf, soccer, baseball, football, bicycling, volleyball, wrestling, cheerleading, skateboarding, hiking, and outdoor activity. Many of its products are sold as leisurewear. In the 1990sNike was a hot stock, trading at a PIE ratioof35 and a PIB ratioof5.1 in mid-1999. By2008, its PIE ratio had fallen to 16 andits PIB ratio to 3.8, but its stock price increased during the bursting of the bubble, from $20 in 2000 to $40in 2004. We will spend considerable time in the book analyzing and valuing Nike. The Build You ^ Own Analysis Product (BYOAP) on the We site tracks Nike from 1996 to 2006. The 2008 financial statements (and site tracks Nike from 1996 to 2006. The 2008 financial statements (and comparative 2007 and 2006 statements) that follow introduce you to the firm. You also can find these financial statements in Nike's 10-K report for 2008 on the SEC's EDGAR Web site, which is accessible through the address given in Exercise 2.8, or through links on the book's Web site. Browse the entire 10-Kas an example of what a typical lo-K looks like. Look at the footnotes referred to in the statements below. Read the management's discussion of the business and get a sense of the business model. Look also at the firm's Web site atwww.nike.com. Examine the financial statements in Exhibit 2.3andusethemtotestyourbasicknowledge of accounting. The questions that follow will help you focus on the pertinent features. A. Using the numbers in the financial statements, show that the following accounting relations hold in Nike's 2008 statements: i. Shareholders' equity = Assets - Liabilities ii. Net incomer Revenue - Expenses A. Using the numbers in the financial statements, show that the following accounting relations hold in Nike's 2008 statements: i. Shareholders' equity = Assets - Liabilities ii. Net income=Revenue - Expenses iii. Cash from operations +Cash from investment +Cash from financing +Effect of exchange rate = Change in cash and cash equivalents B. What are the components of other comprehensive income for 2008? Show that the following accounting relation holds:
