You will need to compute the following financial ratios for Nikes 2022 financial results and compare them to the given financial ratios for 2021:
Gross Profit Rate (Chapter 5)
Days in Inventory (Chapter 6)
Average Accounts Receivable Collection Period in Days (Chapter 8)
Asset Turnover (Chapter 9)
Current Ratio (Chapter 10)
Debt to Assets Ratio (Chapter 10)
Complete the ratios in the following table by using the provided Nikes 2022 financial statements. Please round up to 2 decimal places. Also, please provide your calculations similar to what was done for 2021.
Have the ratios improved or not in 2022 in comparison to 2021? Provide your answers in the Comment column in the following table with a simple yes or no.
How would you assess the general financial health of Nike for 2022 based on the financial ratio analysis that you completed? Provide your explanation in a paragraph below the following table by referring to all of the financial ratios.
If you provide me your analysis on or before November 30, 2022, I will provide you feedback on your analysis. The final analysis will be due Dec 7 during class time. You will also be presenting your project in class on that date.
2. What to submit for Part 1 (group) - 90 points
A. Your groups analysis:
| Financial ratio | 2022 | 2022 Calculation | 2021 | 2021 Calculation | Comment |
| Gross Profit Rate | | | 44.82% | = 19,962/44,538 | |
| Days in Inventory | | | 105.60 | = 365/ 24,576/((6,854+7,367)/2) | |
| Average Accounts Receivable Collection Period in Days | | | 29.55 | = 365/44,538/((4,463+2,749)/2) | |
| Asset Turnover | | | 1.29 | = 44,538/ ((37,740+31,342)/2 | |
| Current Ratio | | | 2.72 | = 26,291/9,674 | |
| Debt to Assets Ratio | | | 66.17% | = 24,973/37,740 | |
B. Assessment of the financial health of Nike in 2022:
Nike Financial Statements:
Consolidated Statements of Income - USD (\$) shares in Millions, \$ in Millions 12 Months Ended Income Statement [Abstract] Revenues Cost of sales Gross profit Demand creation expense Operating overhead expense Total selling and administrative expense May 31, 2022 May 31, 2021 May 31, 2020 Interest expense (income), net Other (income) expense, net Income before income taxes Income tax expense NET INCOME $46,71025,23121,4793,85010,95414,804205(181)6,651605$6,046$3.83$3.75$44,53824,57619,9623,1149,91113,025262146,661934$5,727$3.64$3.56$37,40321,16216,2413,5929,53413,126891392,887348$2,539$1.63$1.60 Earnings per common share: Basic (in dollars per share) Diluted (in dollars per share) Weighted average common shares outstanding: Basic (in shares) Diluted (in shares) 1,578.81,610.81,5731,609.41,558.81,591.6 Consolidated Balance Sheets - USD (\$) \$ in Millions May 31, 2022 May 31, 2021 May 31 , 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 Operating lease right-of-use assets, net Identifiable intangible assets, net Goodwill Deferred income taxes and other assets TOTAL ASSETS $8,5744,4234,6678,4202,12928,2134,7912,9262862843,82140,321$9,8893,5874,4636,8541,49826,2914,9043,1132692422,92137,740$8,3484392,7497,3671,65320,5564,8663,0972742232,32631,342 Current liabilities: Current portion of long-term debt Notes payable Accounts payable Current portion of operating lease liabilities Accrued liabilities Income taxes payable Total current liabilities Long-term debt Operating lease liabilities Deferred income taxes and other liabilities TOTAL LIABILITIES Shareholders' equity: Common stock at stated value Capital in excess of stated value Redeemable preferred stock Accumulated other comprehensive income (loss) Retained earnings (deficit) Total shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 500103,3584206,22022210,7308,9202,7772,61325,040022,8364676,0633069,6749,4132,9312,95524,97332482,2484455,1841568,2849,4062,9132,68423,287 Consolidated Statements of Cash Flows - USD (\$) \$ in Millions 12 Months Ended Cash provided (used) by operations: Net income May 31, 2022 May 31, 2021 May 31, 2020 Adjustments to reconcile net income to net cash provided (used) by operations: Depreciation Deferred income taxes Stock-based compensation Amortization, impairment 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, operating lease right-of-use assets and other current and non-current assets Increase (decrease) in accounts payable, accrued liabilities, operating lease liabilities and other current and non-current liabilities Cash provided (used) 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 Other investing activities Cash provided (used) by investing activities $6,046$5,727$2,539 Cash provided (used) by financing activities: Proceeds from borrowings, net of debt issuance costs Increase (decrease) in notes payable, net Repayment of borrowings 717(650)638123(26)744(385)61153(138)721(380)42939823 Proceeds from exercise of stock options and other stock issuances Repurchase of common stock Dividends - common and preferred Other financing activities Cash provided (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 (504)(1,676)(845)1,365(1,606)507(182)1,3261,239(1,854)(654)24 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 (12,913)8,1993,967(758)(19)(1,524)01501,151(4,014)(1,837)(151)(4,836)(143)(1,315)9,8898,574(9,961)4,2362,449(695)171(3,800)0(52)(197)1,172(608)(1,638)(136)(1,459)1431,5418,3489,889(2,426)742,379(1,086)31(1,028)6,13449(6)885(3,067)(1,452)(52)2,491(66)3,8824,4668,348
