Forecasting the Income Statement, Balance Sheet, and Statement of Cash Flows Fol
ID: 2536061 • Letter: F
Question
Forecasting the Income Statement, Balance Sheet, and Statement of Cash Flows
Following are the financial statements of Nike, Inc.
We forecast Nike's income statement using the following forecast assumptions:
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.
We forecast Nike's balance sheet using the following forecast assumptions:
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.
Instructions: Forecast Nike's fiscal year 2012 stastement of cash flows.
Remember to use negative signs with your answers below, when appropriate.
Consolidated Statements of Income Year ended May 31 In Millions 2011 2010 Revenues $ 20,862 $ 19,014 Cost of sales 11,354 10,214 Gross profit 9,508 8,800 Demand creation expense 2,448 2,356 Operating overhead expense 4,245 3,970 Total selling and administrative expense 6,693 6,326 Interest expense (income), net 4 6 Other (income) (33) (49) Income before income taxes 2,844 2,517 Income taxes 711 610 Net income $ 2,133 $ 1,907Explanation / Answer
Consolidated Statement of Income
$ In Millions
2011
2012
Revenues
20,862
22,948
Cost of Sales
11,354
12,484
Gross Profit
9,508
10,464
Demand Creation Expense
2,448
2,685
Operating Overhead Expense
4,245
4,658
Interest Expense, net
4
4
Other Income
33
33
Income before Taxes
2,844
3,150
Income Taxes
711
788
Net Income
2,133
2,362
Balance Sheet
$ In Millions
2011
2012
Assets
Cash and Equivalents
1,955
3,107
Short Term Investments
2,583
2,583
Accounts Receivable, Net
3,138
3,442
Inventories
2,715
2,983
Deferred Income Taxes
312
344
Prepaid Expenses and Other Current Assets
594
643
Total Current Assets
11,297
13,102
Property, Plant and Equipment, net
2,115
2,231
Identifiable Intangible Assets, net
487
511
Goodwill
205
205
Deferred Income Taxes and Other Assets
894
987
Total Assets
14,998
17,036
Liabilities and Shareholders' Equity
Current Portion of Long Term Debt
200
48
Notes Payable
187
187
Accounts Payable
1,469
1,606
Accrued Liabilities
1,985
2,180
Income Taxes Payable
117
138
Total Current Liabilities
3,958
4,159
Long Term Debt
276
276
Deferred Income Taxes and Other Liabilities
921
1,010
Total Liabilties
5,155
5,445
Common Stock at Stated Value
3
3
Capital in Excess of Stated Value
3,944
3,944
Accumulated and Other Comprehensive Income
95
95
Retained Earnings
5,801
7,549
Total Shareholders' Equity
9,843
11,591
Total Shareholders' Equity and Liabilities
14,998
17,036
workings:
1. Depreciation = 2115 * 17.3% = 366
2. Dividend = 2362 *26% = 614
3.
4. Capital Expenditure : 22948 * 2.1% = 482
Consolidated Statement of Income
$ In Millions
2011
2012
Revenues
20,862
22,948
Cost of Sales
11,354
12,484
Gross Profit
9,508
10,464
Demand Creation Expense
2,448
2,685
Operating Overhead Expense
4,245
4,658
Interest Expense, net
4
4
Other Income
33
33
Income before Taxes
2,844
3,150
Income Taxes
711
788
Net Income
2,133
2,362