In: Accounting
Operating Section of Statement of Cash Flows (Indirect
Method)
Assume following are the income statement and balance sheet for
Nike for the year ended May 31, 2012, and a forecasted income
statement and balance sheet for 2013.
Income Statement | ||
---|---|---|
($ millions) | 2012 actual | 2013 Est. |
Revenues | $ 18,627.0 | $ 21,253.0 |
Cost of sales | 10,239.6 | 11,689.0 |
Gross margin | 8,387.4 | 9,564.0 |
Selling and administrative expense | 5,953.7 | 6,801.0 |
Operating profit | 2,433.7 | 2,763.0 |
Interest income, net | 77.1 | 77.1 |
Other (expense) income, net | (7.9) | (7.9) |
Income before income taxes | 2,502.9 | 2,832.2 |
Income taxes | 619.5 | 684.0 |
Net income | $ 1,883.4 | $ 2,148.2 |
Balance Sheet | ||
---|---|---|
($ millions) | 2012 actual | 2013 Est. |
Assets | ||
Cash and equivalents | $ 2,162.9 | $ 3,355.4 |
Short-term investments | 642.2 | 642.2 |
Accounts receivable, net | 2,759.3 | 3,188.0 |
Inventories | 2,438.4 | 2,740.0 |
Deferred income taxes | 227.2 | 259.0 |
Prepaid expenses and other current assets | 609.3 | 680.0 |
Total current assets | 8,839.3 | 10,864.6 |
Property, plant and equipment* | 4,103.0 | 4,613.0 |
Accumulated depreciation | (2,211.9) | (2,556.9) |
Property, plant and equipment, net | 1,891.1 | 2,056.1 |
Goodwill and other current assets | 1,191.9 | 1,152.9 |
Deferred income taxes and other assets | 520.4 | 594.0 |
Total Assets | $ 12,442.7 | $ 14,667.6 |
Liabilities and Equity | ||
Current portion of long-term debt | $ 6.3 | $ 31.3 |
Notes payable | 177.7 | 107.7 |
Accounts payable | 1,287.6 | 1,488.0 |
Accrued liabilities | 1,761.9 | 2,027.0 |
Income taxes payable | 88.0 | 140.0 |
Total current liabilities | 3,321.5 | 3,794.0 |
Long-term debt | 441.1 | 408.8 |
Deferred income taxes and other liabilities | 854.5 | 976.0 |
Total liabilities | 4,617.1 | 5,178.8 |
Redeemable preferred stock | 0.3 | 0.3 |
Common stock | 2.8 | 2.8 |
Capital in excess of stated value | 2,497.8 | 2,497.8 |
Accumulated other comprehensive income | 251.4 | 251.4 |
Retained earnings | 5,073.3 | 6,736.5 |
Stockholders' equity | 7,825.6 | 9,488.8 |
Total liabilities and equity | $ 12,442.7 | $ 14,667.6 |
* Gross property, plant and equipment and accumulated
depreciation are inserted in the balance sheet; both are taken from
footnotes to the financial statements.
Prepare the net cash flows from operating activities section of a
forecasted statement of cash flows for 2013 using the indirect
method. Treat current and noncurrent deferred tax assets and
liabilities as operating. Operating expenses (such as Cost of sales
and Selling and administrative expense) for 2013 include estimated
depreciation expense of $309 million and amortization expense of
$39 million. Estimated 2013 retained earnings includes dividends of
$467 million.
Enter answers using one decimal place as shown in the above financial statements.
Use negative signs with answers to show a decrease in cash.
Nike,
Inc. STATEMENT OF CASH FLOWS ($ MILLIONS) Forecasted FOR YEAR ENDED May 31, 2013 |
|
---|---|
Net income | $Answer |
Add (Deduct) Items to Convert Net Income to Cash Basis | |
Depreciation | Answer |
Amortization | Answer |
Accounts receivable | Answer |
Inventories | Answer |
Deferred Income taxes | Answer |
Prepaid expenses and other current assets | 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 flow from operating activities | $Answer |
>Decrease in Current Assets OR Increase in Current Liabilities IS ADDED TO NET INCOME, and
>Increase in Current Assets OR Decrease in Current Liabilities is DEDUCTED FROM NET INCOME.
Nike, Inc. |
|
STATEMENT OF CASH FLOWS ($ MILLIONS) |
|
Forecasted FOR YEAR ENDED May 31, 2013 |
|
Net income |
$ 2,148.20 |
Add (Deduct) Items to Convert Net Income to Cash Basis |
|
Depreciation |
$ 309.00 |
Amortization |
$ 39.00 |
Accounts receivable |
$ (428.70) |
Inventories |
$ (301.60) |
Deferred Income taxes |
$ (31.80) |
Prepaid expenses and other current assets |
$ (70.70) |
Deferred income taxes and other assets |
$ (73.60) |
Accounts payable |
$ 200.40 |
Accrued liabilities |
$ 265.10 |
Income taxes payable |
$ 52.00 |
Deferred income taxes and other liabilities |
$ 121.50 |
Net cash flow from operating activities |
$ 2,228.80 |