Question

Operating Section of Statement of Cash Flows (Indirect Method) Following are the income statement and balance...

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

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