EXHIBIT 2- COMPARATIVE BALANCE SHEET OF NIKE CORPORATION MAY 31 IN MILLIONS, EXC

Question

EXHIBIT 2- COMPARATIVE BALANCE SHEET OF NIKE CORPORATION MAY 31 IN MILLIONS, EXCEPT PER SHARE-DATA) ASSETS Current Assets: 2018 2017 Cash and equivalents Accounts receivable, less allowance for doubtful accounts of $87.9 and $80.4 Inventories Deferred income taxes Prepaid expenses and other current assets $634.0 575.5 Total Current Assets Property, plant and equipment, net Identifiable intangible assets, net Goodwill Deferred income taxes 2,101.1 1,514.9 163.7 266.2 4,679.9 1,620.8 118.2 65.6 1,804.1 1,373.8 140.8 260.5 4,154.7 1,614.5 206.0 232.7 232.1 $ 6,440.0 Total Assets $ 6,713.9 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilties: Current portion of long-term debt Notes Payable Account Payable Accrued Liabilites $ 205.7 55.3 425.2 504.4 765.3 83.0 2,0152 1,833.2 624.9 141.6 75.4 572.7 1,054.2 107.2 Income Taxes Payable Total Current Liabilities Long-term debt Deferred Income Taxes and Other Liabilities Commitments and Contigencies Redeemable Preferred Stock Shareholder's Equity 551.6 156.1 0.3 0.3 Common Stock at stated value Class A convertible-97.8 and 98.1 shares outstanding Class B-165.8 and 168.0 shares outs tanding Capital in excess fo stated value Unearned Stock Compensation Accumulated other Comprehensive Loss Retained Earnings 0.2 2.6 589.0 (0.6) 0.2 2.6 538.7 (192.4) (239.7)3,495.0 TotalShareholder's Equity Total Liabilties and Shareholder's Equity 3,990.7 3,839.0 $ 6,713.9$ 6,440.0

Explanation / Answer

Computation and interpretation of the following ratios In Millions 2018 2017 Calculation of Current Assets Current Assets Cash and Cash Equivalents 634 575.5 Accounts Receivable less allawance 2101 1804.1 Inventories 1514.9 1373.8 Deferred Income Taxes 163.7 140.8 Prepaid and other Current Assets 266.2 260.5 Total Current Assets 4679.8 4154.7 Current Liabilities Current portion of long term debts 205.7 55.3 Notes Payables 75.4 425.2 Accounts Payable 572.7 504.4 Accurred Liabilities 1054.2 765.3 Income Taxes Payable 107.2 83 2015.2 1833.2 Formula a Current Ratio CA/CL As per WN 2018 2017 above ($4679.8/$2015.2) ($4154.7/$1833.2) 2.32 2.27 Interpretation A Current Ratio is a useful analysis of the short term debt paying ability of any business. A ratio of 2:1 is considered ideal for any business as per the industry norms. Simply computing the ratio does not disclose the true always be a green signal. It requires a deep analysis of the nature of individual current assets and current liabilities liabilities As per the given problem we can see that the current ratio is more in line with the industry standard of 2:1 However it has improved by .05 as compared to 2017 .It is analyised that the cash balance and accounts receivable have increased as compared to 2017 but the inventories have also increased .But the increase in the cash and receivable is more than inventories which may be due to some obsolete inventories so that the short term solvency of the company have increased. b Quick Ratio or Acid Test Ratio Quick Assets/CL 2018 2017 cash and cash equivalents +Short Term Investment +Current Receivables/CL ($637+$2101)/$2015.2 ($575.5+$1804.1)/$1833.2 1.36 1.3 Interpretation The Quick Ratio is an example of the company being able to pay off its current liabilities with only the quick assets. The ideal industry standard is 1:1 .Since in the given problem we can see that the ratio have increased from 1.3 to 1.36 which means that the quick assets are more than current liabilities which means that the company can pay off liabilities without selling any long term assets. c PROFITABILITY RATIOS 1 Gross Profit margin 2 Net Profit margin These ratios cannot be calculated as the Income Statement is not provided in the question so as to determine the Net income and Sales figure Return on Investment or Return on Assets 2018 2017 Net Income /Av Total Assets Assumption :Since the income statement is not given for this part we have assumed that the retained earnings which is reflected in the BS is for the Current Year Profit which is transferred from the income statement to the BS Also the Average Total Assets for 2017 cannot be determined as 2016 is not given .However for the calculation of 2018 we have taken the average for the two years Average Total Assets ($6713.9+$6440)/2 $6,576.95 $3639.2/$6576.95 $3495/$6440 0.55 0.54 Interpretation The higher the return the higher the return on assets is better.A high ratio indicates that the company is able to utilize its resources well in generating income.Also the return on assets is more useful when compared to the industry average such as market return on T Bills .In the given problem it is seen that the ratio have improved as compared to 2017 Return on Equity Net Income/Average Equity Average Equity Same Principle is applied for 2018 but not for 2017 as in case of total assets above ($3990.7+$3839)/2 $3,914.85 $3939.2/$3914.85 $3495/$3839 1.006 0.91 Interpretation It is a profitability measure that measures the compaanies ability to generate profits from shareholders investments .In other words we can say that it measures how much profit each dollar of common stockholder equity generates. So a return of 1 means that every dollar of stock equity generates 1 dollar of net income.Since the ratio have improved in 2018 it is interpreted that company have efficiently utilized its money to generate the net income in LEVEARAGE RATIO 2018 2017 Debt To Assets TL/TA $2723.2/$6713.9 $2601/$6440 0.41 0.4 Interpretation This is a kind of leverage ratio that measures that how much the total assets are financed by creditors instead of investors.It shows how of the assets % is funded by borrowing compared with the % of resources that are funded by the investors. Times Interest Earned Income before Interest and Taxes or EBIT/Interest Expense Since the income statement is not given in the question the calculation of this ratio and its interpreation is not posible because of insufficient information

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