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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 |
|
Balance Sheets |
||
|
May 31 |
||
|
In Millions |
2011 |
2010 |
|
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% |
|
Consolidated Statements of Income |
||
|
($ millions) |
2011 |
2012 |
|
Revenues |
$21,862 |
$Answer |
|
Cost of sales |
11,354 |
Answer |
|
Gross profit |
10,508 |
Answer |
|
Demand creation expense |
2,948 |
Answer |
|
Operating overhead expense |
4,845 |
Answer |
|
Interest expense, net |
4 |
Answer |
|
Other income |
33 |
Answer |
|
Consolidated Statements of Income |
||
|
($ millions) |
2011 |
2012 |
|
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 |
$Answer |
|
Short-term investments |
2,583 |
Answer |
|
Accounts receivable, net |
3,138 |
Answer |
|
Inventories |
2,715 |
Answer |
|
Deferred income taxes |
312 |
Answer |
|
Prepaid expenses and other current assets |
594 |
Answer |
|
Total current assets |
11,297 |
Answer |
|
Balance Sheet |
||
|
($ millions) |
2011 |
2012 |
|
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 |
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