Forecasting the Income Statement, Balance Sheet, and Statement of Cash Flows The

Question

Forecasting the Income Statement, Balance Sheet, and Statement of Cash Flows
The following are the financial statements of Nike, Inc.

(in Millions)

In Millions

Instructions: Forecast Nike's fiscal year 2014 income statement.

Assume no change for other income and interest income.

Round forecasts to $ millions.

Do not use negative signs with your answers in the income statement.

Interest income, net

Instructions: Forecast Nike's fiscal year 2014 balance sheet.

Assume no change for: short-term investments, goodwill, notes payable, liabilities from discontinued operations, 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:

Instructions: Forecast Nike's fiscal year 2014 stastement of cash flows.

Use negative signs with your answers below, when appropriate.

Consolidated Statements of Income Year ended May 31

(in Millions)

2013 2012 2011 Income from continuing operations: Revenues $25,313 $23,331 $20,117 Cost of sales 14,279 13,183 10,915 Gross profit 11,034 10,148 9,202 Demand creation expense 2,745 2,607 2,344 Operating overhead expense 5,035 4,458 4,017 Total selling and administrative expense 7,780 7,065 6,361 Interest expense (income), net (3) 4 4 Other (income) (15) 54 (25) Income before income taxes 3,272 3,025 2,862 Income tax expense 808 756 690 Net income from continuing operations 2,464 2,269 2,172 Net income (loss) from discontinued operations 21 (46) (39) Net income $ 2,485 $ 2,223 $ 2,133

Explanation / Answer

Consolidated Statements of Income Year ended May 31 Nike's Forecasted Income Statement (in Millions) 2013 2012 2011 2014 2014 Income from continuing operations: Revenues 25313 23331 20117 27338 $Answer Cost of sales 14279 13183 10915 15419 Answer Gross profit 11034 10148 9202 11919 Answer Demand creation expense 2745 2607 2344 2953 Answer Operating overhead expense 5035 4458 4017 5440 Answer Total selling and administrative expense 7780 7065 6361 8393 Answer Interest expense (income), net -3 4 4 4 Answer Other (income) -15 54 -25 -25 Answer Income before income taxes 3272 3025 2862 3548 Answer Income tax expense 808 756 690 876 Answer Net income from continuing operations 2464 2269 2172 2671 $Answer Net income (loss) from discontinued operations 21 -46 -39 0 $Answer Net income $ 2,485 $ 2,223 $ 2,133 2671 $Answer Consolidated Balance Sheets Nike's Forecasted Balance Sheet In Millions 2013 2012 2014 2014 Assets Cash and equivalents $ 3,337 $ 2,317 4759 $Answer Short-term investments 2628 1440 2628 Answer Accounts receivable, net 3117 3132 3363 Answer Inventories 3434 3222 3718 Answer Deferred income taxes 308 262 328 Answer Prepaid expenses and other current assets 802 857 875 Answer Assets of discontinued operations -- 615 Total current assets 13626 11845 15671 Answer Property, plant and equipment, net 2452 2209 2650 Answer Identifiable intangible assets (net) 382 370 304 Answer Goodwill 131 131 131 Answer Deferred income taxes and other assets 993 910 1066 Answer Total assets $ 17,584 $ 15,465 19822 $Answer Liabilities and Shareholders' Equity Current liabilities: Current portion of long-term debt 57 $ 49 46 $ Answer Notes payable 121 108 121 Answer Accounts payable 1646 1549 1777 Answer Accrued liabilities 1986 1941 2132 Answer Income taxes payable 98 65 109 Answer Liabilities of discontinued operations 18 170 18 Answer Total current liabilities 3926 3882 4204 Answer Long-term debt 1210 228 1153 Answer Deferred income taxes and other liabilities 1292 974 1394 Answer Total liabilities 6428 5084 6751 Answer Redeemable preferred stock -- -- Shareholders' Equity Common sotck at stated value Class A covertible -- 178 and 180 shares outstanding -- -- Class B -- 716 and 736 shares outstanding 3 3 3 Answer Capital in excess of stated value 5184 4641 5184 Answer Accumulated other comprehensive income 274 149 274 Answer Retained earnings 5695 5588 7610.357 Answer Total shareholders' equity 11156 10381 13071.36 Answer Total liabilities and shareholders' equity $ 17,584 $ 15,465 19822 $ Answer Nike's Forecasted Statement of Cash Flows ($ millions) 2014 Est. Net income $ Answer 2671 Add: depreciation Answer 485 Add: amortization Answer 78 Change in Accounts receivable Answer -246 Change in Inventories Answer -284 Change in Deferred income taxes Answer -20 Change in Prepaid expenses & other current assets Answer -73 Change in LT Deferred income taxes & other assets Answer -73 Change in Accounts payable Answer 131 Change in Accrued liabilities Answer 146 Change in Income taxes payable Answer 11 Change in LT Deferred income taxes and other liabilities Answer 102 Net cash from operating activities Answer 2930 Capital expenditures Answer -683 Net cash from investing activities Answer -683 Dividends Answer -756 Payments of LT debt Answer -68 Net cash from financing activities Answer -824 Net change in cash Answer 1422 Beginning cash Answer 3337 Ending cash $ Answer 4759

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