Professional Documents
Culture Documents
This Chapter
This chapter continues the
reformulation and analysis
with the balance sheet and
income statement.
The reformulation follows the
design in Chapter 7.
What assets
and liabilities
are classified
as operating ?
As financing ?
What items in
the income
statement are
classified as
operating ? As
financing ?
What ratios
are calculated
from
reformulated
statements ?
What do they
mean ?
Nike, Inc.:
Reformulated Balance Sheets
1,857,513
$ 565,233
660,599
$ 693,599
532,320
458,435
111,516
61,730
-----------
352,692
100,070
48,169
1,726,850
----------183,799
124,125
196,138
44,892
34,161
-------------$ 2,440,628
--------------
-----------149,765
24,690
42,296
22,478
23,663
-------------$ 1,989,742
--------------
December 31
-----------------------------------2004
---------------Amounts in thousands,
except per share data
$ 63,179
$ 8,055
100,627
163
Accounts payable
183,853
155,904
Accrued expenses
386,725
374,849
71,930
----------806,314
----------360,126
27,017
----------565,988
----------353,225
8,514
11,657
45,718
25,162
1.018
1.011
1,985,324
1,796,321
(780,510)
(740,189)
(5,804)
19,928
(1,225)
(22,208)
------------1,219,956
------------1,033,710
Microsoft Corporation:
Reformulated Balance Sheet
Net sales
Expenses to generate sales
Operating income from sales (before tax)
Tax on operating income from sales
+ Tax as reported
+ Tax benefit from net financial expenses
Tax allocated to other operating income
Operating income from sales (after tax)
Other operating income (expense) requiring tax allocation
Restructuring charges and asset impairments
Merger expenses
Gains and losses on asset sales
Gains and losses on security transactions
Tax on other operating income
After-tax operating items
Equity share in subsidiary income
Operating items in extraordinary income
Dirty-surplus operating items in Table 8.1
Hidden-dirty surplus operating items
Operating income (after tax)
Top-down
Tax Allocation
Bottom-up
Tax Allocation
$4,000
(3,400)
(100)
500
(150)
$ 350
Revenue
$4000
Operating expenses
(3,400)
Operating income before tax
600
Tax expense:
Tax reported
$150
Tax benefit for interest
35
(185)
($100 x 0.35)
Operating income after tax
$ 415
Net income
Interest expense
Tax benefit
Operating income after tax
$350
$100
35
65
$415
Nike
Reebok
$4,028
$1,035
$388
(416)
(179)
(207)
$83
(88)
(18)
(23)
Comprehensive income
Net income reported
$946
Currency translation gain
28
Gains on hedging instruments
126
Loss on option exercise
$127
Tax benefit
(47) (80) 1,019
Balance May 31, 2004
$4,840
$192
38
4
$32
12
(20)
214
$1,226
Microsoft Corporation:
GAAP Income Statements
Year Ended June 30
2002
2001
_________________________________________________________________________________________
Revenue
$ 28,365
$ 25,296
Operating expenses:
Cost of revenue
5,191
3,455
Research and development
4,307
4,379
Sales and marketing
5,407
4,885
General and administrative
1,550
857
-------------------------------------------------------- ------ - Total operating expenses
16,455
13,576
-------------------------------------------------------- ------ - -
Operating income
Losses on equity investees and other
Investment income(loss)
--------------------------------------------------------
11,910
(92)
(305)
11,720
(159)
(36)
- ------ -
- -
Net income
7,829
- ------ -
7,721
(375)
- -
$ 7,829
$ 7,346
__________________________________________________________________________________
Microsoft Corporation:
Reformulated Income Statements
Expense Ratios
Expense Ratio
Expense for an Activity
Sales
Financial Asset
Total Financial Assets
Financial Liability Composition Ratio
Financial Obligation
Total Financial Obligations
Growth Ratios
Change in Sales
Prior Period' s Sales
Growth in NOA
Growth in CSE
Change in CSE
Beginning CSE
Summary Profitability
Measures
Operating Profitability:
RNOA t
OI t
1
NOA t NOA t 1
2
Financing Profitability:
NBC t
or
NFE t
1
NFO t NFO t 1
2
RNFA t
NFI t
1
NFA t NFA t 1
2