Assume the following are the financial statements of Nike, Inc. Consolidated Statements of Income…

Assume the following are the financial statements of Nike, Inc. Consolidated Statements of Income Year ended May 31 In Millions 2011 2010 Revenues $ 21,862 $ 19,014 Cost of sales 11,354 10,214 Gross profit 10,508 8,800 Demand creation expense 2,948 2,356 Operating overhead expense 4,845 3,970 Total selling and administrative expense 7,793 6,326 Interest expense (income), net 4 6 Other (income) (33) (49) Income before income taxes 2,744 2,517 Income taxes 611 610 Net income $ 2,133 $ 1,907 Balance Sheets May 31 In Millions 2011 2010 Assets Cash and equivalents $ 1,955 $ 3,079 Short-term

question Assume the following are the financial statements of Nike, Inc. Consolidated Statements of Income Year ended May 31 In Millions 2011 2010 Revenues $ 21,862 $ 19,014 Cost of sales 11,354 10,214 Gross profit 10,508 8,800 Demand creation expense 2,948 2,356 Operating overhead expense 4,845 3,970 Total selling and administrative expense 7,793 6,326 Interest expense (income), net 4 6 Other (income) (33) (49) Income before income taxes 2,744 2,517 Income taxes 611 610 Net income $ 2,133 $ 1,907 Balance Sheets May 31 In Millions 2011 2010 Assets Cash and equivalents $ 1,955 $ 3,079 Short-term investments 2,583 2,067 Accounts receivable, net 3,138 2,650 Inventories 2,715 2,041 Deferred income taxes 312 249 Prepaid expenses and other current assets 594 873 Total current assets 11,297 10,959 Property, plant and equipment, net 2,115 1,932 Identifiable intangible assets (net) 487 467 Goodwill 205 188 Deferred income taxes and other assets 894 873 Total assets $ 14,998 $ 14,419 Liabilities and Shareholders’ Equity Current portion of long-term debt $ 200 $ 7 Notes payable 187 139 Accounts payable 1,469 1,255 Accrued liabilities 1,985 1,904 Income taxes payable 117 59 Total current liabilities 3,958 3,364 Long-term debt 276 446 Deferred income taxes and other liabilities 921 855 Total liabilities 5,155 4,665 Common stock at stated value 3 3 Capital in excess of stated value 3,944 3,441 Accumulated other comprehensive income 95 215 Retained earnings 5,801 6,095 Total shareholders’ equity 9,843 9,754 Total liabilities and shareholders’ equity $ 14,998 $ 14,419 We forecast Nike’s income statement using the following forecast assumptions: Revenue growth based on growth in revenues from 2010 to 2011 15% Cost of sales/Revenues 51.9% Demand creation expense/Revenues 13.5% Operating overhead expenses/Revenues 22.2% Income taxes/Income before income taxes 22.3% Instructions: Forecast Nike’s fiscal year 2012 income statement. Assume no change for: other income and interest expense. Round forecasts to $ millions. Do not use negative signs with your answers in the income statement. Consolidated Statements of Income ($ millions) 2011 2012 Revenues $21,862 $Answer Cost of sales 11,354 Answer Gross profit 10,508 Answer Demand creation expense 2,948 Answer Operating overhead expense 4,845 Answer Interest expense, net 4 Answer Other income 33 Answer Income before income taxes 2,744 Answer Income taxes 611 Answer Net Income $ 2,133 $Answer Instructions: Forecast Nike’s fiscal year 2012 balance sheet. Assume no change for: short-term investments, goodwill, notes payable, common stock, capital in excess of stated value and accumulated other comprehensive income. Round forecasts to $ millions. We forecast Nike’s balance sheet using the following forecast assumptions: Accounts receivable/Revenues 14.4% Inventories/Revenues 12.4% Deferred income taxes/Revenues 1.4% Prepaid expenses and other current assets/Revenues 2.7% L-T deferred income taxes and other assets/Revenues 4.1% Depreciation expense/Prior-year PPE, net (incl. in overhead) 17.3% Amortization expense $24 Accounts payable/Revenues 6.7% Accrued liabilities/Revenues 9.1% Income taxes payable/Revenues 0.5% Deferred income taxes and other liabilities/Revenues 4.2% Capital expenditures/Revenues 2.0% Dividends/Net income 26.0% Current portion of L/T debt due in 2013 $48 Balance Sheet ($ millions) 2011 2012 Assets Cash and equivalents $ 1,955 $Answer Short-term investments 2,583 Answer Accounts receivable, net 3,138 Answer Inventories 2,715 Answer Deferred income taxes 312 Answer Prepaid expenses and other current assets 594 Answer Total current assets 11,297 Answer Property, plant and equipment, net 2,115 Answer Identifiable intangible assets, net 487 Answer Goodwill 205 Answer Deferred income taxes and other assets 894 Answer Total assets $14,998 $Answer Liabilities and Shareholders’ Equity Current portion of long-term debt $ 200 $ Answer Notes payable 187 Answer Accounts payable 1,469 Answer Accrued liabilities 1,985 Answer Income taxes payable 117 Answer Total current liabilities 3,958 Answer Long-term debt 276 Answer Deferred income taxes and other liabilities 921 Answer Total liabilities 5,155 Answer Common stock at stated value 3 Answer Capital in excess of stated value 3,944 Answer Accumulated other comprehensive income 95 Answer Retained earnings 5,801 Answer Total shareholders’ equity 9,843 Answer Total liabilities and shareholders’ equity $14,998 $ Answer Instructions: Forecast Nike’s fiscal year 2012 stastement of cash flows. Use negative signs with your answers below, when appropriate. Nike’s Forecasted Statement of Cash Flows ($ millions) 2012 Est. Net income $ Answer Add: depreciation Answer Add: amortization Answer Change in Accounts receivable Answer Change in Inventories Answer Change in Deferred income taxes Answer Change in Prepaid expenses & other current assets Answer Change in LT Deferred income taxes & other assets Answer Change in Accounts payable Answer Change in Accrued liabilities Answer Change in Income taxes payable Answer Change in LT Deferred income taxes and other liabilities Answer Net cash from operating activities Answer Capital expenditures Answer Net cash from investing activities Answer Dividends Answer Payments of LT debt Answer Net cash from financing activities Answer Net change in cash Answer Beginning cash Answer Ending cash $ Answer