Question

Below is the Liabilities and Shareholder Equity section for Nike for a consecutive five-year period.

NIKE (NKE) 2019 2018 2017 2016        2015

Current Liabilities

Accounts Payable                    9.6% 9.7% 8.5% 7.8% 7.4%

Short Term Debt 0.9%      1.9% 4.2% 7.5% 14.8%

Other Current Liabilities 12.3% 13.8% 17.3% 13.2% 8.5%

Total Current Liabilities 22.7% 25.5% 30.0% 28.5% 30.7%

Non-Current liabilities

Long Term Debt                       7.8% 8.6% 8.2% 9.7% 7.5%

Deferred Income Taxes 5.3% 5.3% 2.3% 2.2% 1.8%

Total Non-Curr Liab 13.1% 14.0% 10.5% 11.9%     9.3%

Total Liabilities                       35.8% 39.4% 40.6% 40.4% 40.0%

Shareholder's Equity

Common Stock Equity 64.2% 60.6% 59.4%       59.6%     60.0%

Total Liab & SH Equity 100.0% 100.0% 100.0% 100.0%    100.0%

Based on these statements alone, which of the following statements is most accurate?

Nike made significant investment in property, plant and equipment over the period 2015-2019.

Nike must have issued stock during the period 2015-2019.

Nike was relatively more reliant on debt financing in 2019 than in 2015.

Nike’s Debt consisted mostly of short-term debt in 2019.

Answer 1

Ans) Nike must have issued stock during the period 2015-2019.

Reason: Equity as percentage of total balance sheet size have been increasing from 2015 to 2019. This means that the company have been issuing new stocks

Option 1) is not most accurate as information regarding assets is not provided

Option 3) is not correct as Debt as percentage of total balance sheet size have been decreasing from 2015 to 2019.

Option 4) is not correct as long term debt as percentage of balance sheet is more than short term debt as percentage of balance sheet