Question

Operating Section of Statement of Cash Flows (Indirect Method)
Following are the income statement and balance sheet for Nike Inc. for the year ended May 31, 2016, and a forecasted income statement and balance sheet for 2017.

Nike Inc. Income Statement For Year Ended May 31
$ millions	2016 actual	2017 Est.
Revenues	$ 32,376	$ 34,319
Cost of sales	17,405	18,464
Gross profit	14,971	15,855
Demand creation expense	3,278	3,466
Operating overhead expense	7,191	7,619
Total selling and administrative expense	10,469	11,085
Interest expense (income), net	19	19
Other (income) expense, net	(140)	(140)
Income before income taxes	4,623	4,891
Income tax expense	863	915
Net income	$ 3,760	$ 3,976

NIKE INC. Balance Sheet May 31
$ millions	2016 Actual	2017 Est.
Current Assets
Cash and equivalents	$ 3,138	$ 5,337
Short-term investments	2,319	2,319
Accounts receivable, net	3,241	3,432
Inventories	4,838	5,114
Prepaid expenses and other current assets	1,489	1,579
Total current assets	15,025	$17,781
Property, plant and equipment, net	3,520	3,961
Identifiable intangible assets, net	281	268
Goodwill	131	131
Deferred income taxes and other assets	2,439	2,574
Total Assets	$ 21,396	$ 24,715
Current liabilities
Current portion of long-term debt	$ 44	$ 6
Notes payable	1	1
Accounts payable	2,191	2,334
Accrued liabilities	3,037	3,226
Income taxes payable	85	103
Total current liabilities	5,358	5,670
Long-term debt	2,010	2,004
Deferred income taxes and other liabilities	1,770	1,888
Total liabilities	9,138	9,562
Shareholders’ equity:
Class A convertible common stock	0	0
Class B common stock	3	3
Capital in excess of stated value	7,786	7,786
Accumulated other comprehensive income	318	318
Retained earnings	4,151	7,046
Total shareholders’ equity	12,258	15,153
Total liabilities and shareholders’ equity	$21,396	$24,715

Prepare the net cash flows from operating activities section of a forecasted statement of cash flows
for 2017 using the indirect method. Treat deferred tax assets and liabilities as
operating. Operating expenses (cost of sales) for 2017 include estimated depreciation expense of $760
million and amortization expense of $13 million.

Use negative signs with answers to show a decrease in cash.

Nike, Inc. STATEMENT OF CASH FLOWS Forecasted For Year Ended May 31, 2017 ($ millions)
Net income	Answer
Depreciation	Answer
Amortization	Answer
Accounts receivable	Answer
Inventories	Answer
Prepaid expenses and other current	Answer
Deferred income taxes and other assets	Answer
Accounts payable	Answer
Accrued liabilities	Answer
Income taxes payable	Answer
Deferred income taxes and other liabilities	Answer
Net cash from operating activities	Answer

Answer 1