Professional Documents
Culture Documents
Please use N/A if you could not locate an item or feel it does not apply.
2. List up to five products or services your company sells or provides and customers to whom
those products are sold.
Products Customers
Trainers(shoes) Involved in sports/gym/casual exercises.
Men’s Sports Running Shirt For sportsmen/women.
iPods For music lovers.
Sports Equipment For people playing professionally/casually
Training Kits/DVDS To customers who are learning a new
sport.
Page 1 of 7
3. Size of Company. (as of FYE 2008)
4. Use the financial highlights section of your company’s annual report to note the following
information. (Note: FYE may need to be adjusted).
Total Assets $ 9869,6 mil $ 8,793.6 mil $ 7,908.7 mil $ 6,821.1 mil
Total Liabilities $ 3584.1 mil $ 3149.1 mil $ 3126.7 mil $ 3013.2 mil
Long-term Debt $ 410.7 mil $ 687.3 mil $ 682.4 mil $ 551.6 mil
a. Does your company’s MD&A section have the following major sections?
(Note: All companies may not have these sections or use the exact terminology.)
Yes No
Overview
Results of operations
Page 2 of 7
Yes No
Other:
b. What is the general tone of management’s comments in this section? Was the most recent
year a positive or negative experience for the company? Is management optimistic or
pessimistic about the future? Discuss.
The management seems optimistic about the future in MD&A report and discusses various
beneficial effects of the changes that have been made in the previous year i.e. change in
tax policies. It also discusses some of its policies such has hedging, future contracts and
6. Locate the Statement Management Responsibility and the Report of the Independent
Accountants (or Auditor’s Report) and read them carefully to answer the following questions.
a. Who is responsible for the preparation and content of the financial statements?
The Management of Nike (the internal auditors of Nike).
public firm (auditing firm) and along with that firm and other internal committees and
Internal audit staff reviews matters regarding financial affairs of the company. This
includes checking the effectiveness of the accounting control system of the company and
overlooking the review of current year’s financial statements.
Page 3 of 7
d. Which financial statements are covered by the audit report?
The audit report covers, consolidated income statement, consolidated balance sheet,
and further to that notes and details regarding the components included in the above
e. Who is responsible for assessing that the financial statements are fairly stated?
The independent public accounting firm, in this case, PricewaterhouseCoopers.
h. If your firm did not receive an unqualified opinion, what reason(s) was (were) given?
7. Review the Basic Company Facts and other parts of the Annual Report to find the following
information:
c. When will the annual stockholder’s meeting be held? Month of July 2008
Page 4 of 7
f. What company serves as the Transfer Agent? Computershare Trust Company, N.A
Overall Nike has over 130 wholly owned subsidiaries. 20 of these subsidiaries operate
within the United States while 110 in the rest of the World. Almost all of the
subsidiaries carry on the same line of business except for three. One of these three
is an insurance company.
When the company and the subsidiaries are combined, all transactions between the company
and its subsidiaries must first be eliminated. Why do you think this is necessary?
This is necessary to eliminate these transactions being accounted twice. For example if one of
subsidiaries sells products or services to the other, it would show a revenue while the recipient
subsidiary would show an expense while overall Nike has neither earned any revenue or
incurred any expenditure, therefore to offset this these transactions are eliminated. Even if
were included, they would eventually cancel off the affects, so why do the unnecessary
calculations.
9. What format was used to prepare your firm’s income statement? (check one)
Hint: If gross margin (also called gross profit) is reported on the income statement, it’s the
multiple step format.
Single-step
Multiple step
Page 5 of 7
10. What is your company’s total sales revenue?
11. For each of the selected items on the income statement, determine its percentage relative to
sales revenue for the most recent year and the next most recent year. If an item is not reported
draw a line through it.
Percen Percen
Most Recent t of Next Most t of
Income Statement Line Year (FY 08) Sales Recent Year Sales
12. Based on the common-size analysis above, which item(s) appear to be the most significant in
explaining the change in net income (profitability) from the next most recent year to the most
recent year (i.e., which items changed most relative to sales revenue)? Discuss below.
There are two significant changes. Nike’s Operating Expenses have increased but however
The share of net income has increased by approx. 1% (compared to total sales). This is due
To the fact that Nike has decreased the COGS by over 1 % compared to total Sales and
Secondly the tax liability for Nike has been reduced from 4% of total sales in FYE 2007 to
3% in FYE 2008. Due to these two effects there is increase in the % of net income.
Page 6 of 7
13. Which of the following terms describes the balance sheet as reported by your firm? (check
those that apply.)
14. Identify the amounts that your firm reported for each of the following categories and the
percentage of total assets that each represents. (FYE 2008)
Amount Percent
(in millions)
15. If you were a creditor of a firm you would be interested in whether the firm had enough
resources to pay you when you bill came due, which can be determined by two indicators:
A. The amount of working capital, the cushion by which total current assets exceed total
current liabilities
WC = current assets – current liabilities
Working Capital for FYE 08= 8944.6 mil – 3311.6 mil = $ 5633 mil
B. The current ratio, which reveals how many dollars of current assets are available to pay
off each dollar of current liabilities.
CR = Current Assets
Current Liabilities
CR= 8944.6/3311.6 = 2.70
Page 7 of 7