Question

Below is the asset section of common-size balance sheets for Nike for a consecutive five-year period.   

      NIKE (NKE) 2019      2018     2017       2016        2015

Current Assets

Cash and Equivalents 15.8%    10.5%      9.4%       8.9%        5.2%

Receivables 25.7%    26.9%   31.3%     28.0%      27.9%

Inventories 20.6%    20.7%   22.6%     21.3%      24.5%

Other Current Assets 10.1% 11.8% 6.4% 6.2% 4.7%

Total Current Assets 72.2% 69.8%    69.7%      64.5%     62.3%

Non-Current Assets

P P & E, Net 18.3% 20.1% 24.1% 25.1% 27.8%

Intangibles                                6.2% 6.4% 2.7% 6.8%        6 .8%

Other Non-Curr Assets 3.4% 3.7% 3.4% 3.6% 3.1%

Total Non-Curr Assets 27.8% 30.2% 30.3% 35.5% 37.7%

Total Assets                          100.0% 100.0% 100.0%   100.0%    100.0%

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

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

Based on analysis of its assets, Nike was more liquid in 2019 than in 2015.

Nike had less money invested in inventory in 2019 than in 2015.

Nike had relatively more money invested in PP&E in 2019 than in 2015

Answer 1

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

As per the data given, there is no information about the debt of the company.

-Based on analysis of its assets, Nike was more liquid in 2019 than in 2015.

Liquid Assets represents Total Current Assets except Inventory and Prepaid Expenses. In 2015, Liquid Assets were 62.30-24.50 = 37.80%, whereas in 2019, Liquid Assets were 72.20-20.60 = 51.60%, which means that Nike Ltd has more liquid assets in 2019 as compared to that in 2015.

-Nike had less money invested in inventory in 2019 than in 2015.

In 2015, Inventory represents 24.50% of Total Assets, however in 2019, Inventory represents 20.60% of Total Assets, which means that Nike ltd has lesser amount invested in Inventory as compared to that in 2015.

-Nike had relatively more money invested in PP&E in 2019 than in 2015

Investment in PP&E represents 27.80% in 2015, and 18.30% in the year 2019, which means that Nike Ltd has lesser money invested in PP&E in the year 2019 as companred to that in 2015.

ANSWER:- Accordingly most accurate statement is Nike Ltd has more Liquid Assets in 2019 as compared to that in 2015, which is 13.80% more than that in 2015.