ookmarks Window Help Financial Statement Analysis The financial statements for N

Question

ookmarks Window Help Financial Statement Analysis The financial statements for Nike, Inc., are available in Appendix E. The following additional information is available (in thousands): Accounts receivable at May 31, 2013: $3,117 Inventories at May 31, 2013: 3,484 Total assets at May 31, 2013: 17,545 Stockholders" equity at May 31, 2013: 11,08 1. Determine the following measures for the fiscal years ended May 31, 2015, and May 31, 2014. Do not round interim calculations. Round the working capital amount in part (a) to the nearest dollar, Round all other finai answers to one decimal place. When required, use the rounded final Fiscal Year 2015 Fiscal Year 2014 Working capital (in millions) $8,669 2.7 1.7 8.5 9,642 b. Current ratio c. Quick ratio d. Accounts receivable turnover e. Number of days sales in receivables f Inventory turnover g. Number of days' sales in invenvtory h. Ratio of labilities to stockholders' equity days days days 0.7 0.7 1.5 1.5 Asset turmover Returnm on total assets, assuming interest expense is $28 milion for the Check My Work ssignment for Grading

Explanation / Answer

The blanks are completed as follows:

Part e)

Number of Days' Sales in Receivables:

The number of days' sales in receivables can be calculated with the use of following formula:

Number of Days' Sales in Receivables = 365/Accounts Receivable Turnover Ratio

_____

Using the values provided in the question and table, we get,

Number of Days' Sales in Receivables (2015) = 365/9 = 40.6 days

Number of Days' Sales in Receivables (2014) = 365/8.5 = 42.9 days

_____

Part f)

Inventory Turnover Ratio:

The inventory turnove ratio can be calculated with the use of formula given below:

Inventory Turnover Ratio = Cost of Sales/Average Inventory

Using the values provided in the question, we get,

Inventory Turnover Ratio (2015) = 16,534/((4,337 + 3,947)/2) = 4.0

Inventory Turnover Ratio (2014) = 15,353/((3,947 + 3,484/)/2) = 4.1

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Part g)

The number of days' sales in inventory can be calculated with the use of formula given as below:

Number of Days' Sales in Inventory = 365/Inventory Turnover Ratio

_____

Using the values provided in the question and table, we get,

Number of Days' Sales in Inventory (2015) = 360/4 = 91.4 days (if actual inventory turnover ratio is used in the calculation) or 90 days (if rounded off inventory turnover ratio of 4 is used)

Number of Days' Sales in Inventory (2014) = 365/4.1 = 88.3 days (actual inventory turnover ratio is used in the calculation) or 89.02 days (if rounded off inventory turnover ratio of 4.1 is used)

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Notes:

1) There can be a slight difference in final answers on account of rounding off values and the basis used to calculate the ratios.

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