NIKE:

Need the following ratios to be calculated using the financial sheets copied at the bottom. Each ratio needs to be calculated using the information from 2016. Each ratio also needs to be broken down and illustrated by the step by step process. Finally, please include any and all observations for each ratio and analysis.

1) Common Size analysis

2) Common size vertical analysis & graph

3) Current Ratio

4) Quick Ratio

5) Cash Ratio

6) Inventory Turnover

7) Receivables Turnover

8) Total Asset Turnover

9) Fixed Asset Turnover

10) Gross profit margin

11) Operating Profit margin

12) Net profit margin

13) Return on total assets

14) return on equity

15) basic earning power

16) Deb/net worth ratio

17) debt ratio

18) DuPont System

19) Times-interest-earned

Balance Sheet:

Consolidated Balance Sheets - USD ($) $ in Millions	May 31, 2017	May 31, 2016
Current assets:
Cash and equivalents	$ 3,808	$ 3,138
Short-term investments	2,371	2,319
Accounts receivable, net	3,677	3,241
Inventories	5,055	4,838
Prepaid expenses and other current assets	1,150	1,489
Total current assets	16,061	15,025
Property, plant and equipment, net	3,989	3,520
Identifiable intangible assets, net	283	281
Goodwill	139	131
Deferred income taxes and other assets	2,787	2,422
TOTAL ASSETS	23,259	21,379
Current liabilities:
Current portion of long-term debt	6	44
Notes payable	325	1
Accounts payable	2,048	2,191
Accrued liabilities	3,011	3,037
Income taxes payable	84	85
Total current liabilities	5,474	5,358
Long-term debt	3,471	1,993
Deferred income taxes and other liabilities	1,907	1,770
Commitments and contingencies
Redeemable preferred stock	0	0
Shareholdersâ equity:
Capital in excess of stated value	8,638	7,786
Accumulated other comprehensive (loss) income	(213)	318
Retained earnings	3,979	4,151
Total shareholdersâ equity	12,407	12,258
TOTAL LIABILITIES AND SHAREHOLDERSâ EQUITY	23,259	21,379
Class A Convertible Common Stock
Shareholdersâ equity:
Common stock at stated value	0	0
Class B Common Stock
Shareholdersâ equity:
Common stock at stated value	$ 3	$ 3

Income Statement:

Consolidated Statements of Income - USD ($) $ in Millions	12 Months Ended
Consolidated Statements of Income - USD ($) $ in Millions	May 31, 2017	May 31, 2016	May 31, 2015
Income Statement [Abstract]
Revenues	$ 34,350	$ 32,376	$ 30,601
Cost of sales	19,038	17,405	16,534
Gross profit	15,312	14,971	14,067
Demand creation expense	3,341	3,278	3,213
Operating overhead expense	7,222	7,191	6,679
Total selling and administrative expense	10,563	10,469	9,892
Interest expense (income), net	59	19	28
Other (income) expense, net	(196)	(140)	(58)
Income before income taxes	4,886	4,623	4,205
Income tax expense	646	863	932
NET INCOME	$ 4,240	$ 3,760	$ 3,273
Earnings per common share:
Basic (in dollars per share)	$ 2.56	$ 2.21	$ 1.90
Diluted (in dollars per share)	2.51	2.16	1.85
Dividends declared per common share (in dollars per share)	$ 0.70	$ 0.62	$ 0.54

Cash Flow Sheet

Consolidated Statements of Cash Flows - USD ($) $ in Millions	12 Months Ended
	May 31, 2017	May 31, 2016	May 31, 2015
Cash provided by operations:
Net income	$ 4,240	$ 3,760	$ 3,273
Income charges (credits) not affecting cash:
Depreciation	706	649	606
Deferred income taxes	(273)	(80)	(113)
Stock-based compensation	215	236	191
Amortization and other	10	13	43
Net foreign currency adjustments	(117)	98	424
Changes in certain working capital components and other assets and liabilities:
(Increase) decrease in accounts receivable	(426)	60	(216)
(Increase) in inventories	(231)	(590)	(621)
(Increase) in prepaid expenses and other current assets	(120)	(161)	(144)
(Decrease) increase in accounts payable, accrued liabilities and income taxes payable	(364)	(889)	1,237
Cash provided by operations	3,640	3,096	4,680
Cash used by investing activities:
Purchases of short-term investments	(5,928)	(5,367)	(4,936)
Maturities of short-term investments	3,623	2,924	3,655
Sales of short-term investments	2,423	2,386	2,216
Investments in reverse repurchase agreements	0	150	(150)
Additions to property, plant and equipment	(1,105)	(1,143)	(963)
Disposals of property, plant and equipment	13	10	3
Other investing activities	(34)	6	0
Cash used by investing activities	(1,008)	(1,034)	(175)
Cash used by financing activities:
Net proceeds from long-term debt issuance	1,482	981	0
Long-term debt payments, including current portion	(44)	(106)	(7)
Increase (decrease) in notes payable	327	(67)	(63)
Payments on capital lease and other financing obligations	(17)	(7)	(19)
Proceeds from exercise of stock options and other stock issuances	489	507	514
Excess tax benefits from share-based payment arrangements	177	281	218
Repurchase of common stock	(3,223)	(3,238)	(2,534)
Dividends â common and preferred	(1,133)	(1,022)	(899)
Cash used by financing activities	(1,942)	(2,671)	(2,790)
Effect of exchange rate changes on cash and equivalents	(20)	(105)	(83)
Net increase (decrease) in cash and equivalents	670	(714)	1,632
Cash and equivalents, beginning of year	3,138	3,852	2,220
CASH AND EQUIVALENTS, END OF YEAR	3,808	3,138	3,852
Cash paid during the year for:
Interest, net of capitalized interest	98	70	53
Income taxes	703	748	1,262
Non-cash additions to property, plant and equipment	266	252	206
Dividends declared and not paid	$ 300	$ 271	$ 240

Like many new graduates in 2016, Marie Little struggled to finda sustained professional job. In early March she had finally founda good position, but was laid off by June. This ended her briefcorporate career, finding herself once again without income. Mariepacked her personal items from her office cubicle, passing too manyempty spaces created by temporary tan walls. It was a long walkthrough the lending companyâs hall, but she began to think aboutstarting her own businessâ¦as far away from mortgage institutions aspossible. She began to think; âIf I own the business they cannotlay me off and I can actually create a business where I can use mydegree.â Like many hired by the giant lender, she had no financialexperience. Her job had been to sell a mortgage product and pushher customers into a longer term refinance agreement with upfrontprofitable fees for her financial institution. Financial knowledgewas not a premium, the institution wanted sales.

Marie had graduated from the College of Arts, Science, andLetters with a bachelorâs degree majoring in art, but had alsotaken a few elective courses in web design. During her summerbreaks she had working for a marketing firm in their webadvertising department. The job had been interesting, which was whyshe enrolled in the three elective web design and developmentcourses. She decided to rely on her summer job experience indeveloping web pages for clients. The five years she spent gettingan art degree would also be helpful, and could be easily applied toher technical web design skills. And it would certainly be a lotless boring than selling the same mortgage productâ¦over and overagain. After a week of notes and thoughts, she began to formalizeher strategy into a business plan. The purpose of Marieâs firmwould be to create original, on the edge web sites, webadvertisements, and consult on existing web page designs. She knewof several similar companies in the southeast area of the state,and planned to focus on the metro area, eventually expanding intomost of the southern part of the state.

On June 20, 2016, she transferred all of her savings, $22,000,to a new bank account with the company name, and two days later sheadded $31,000 borrowed from her Mom to the account. After thatthings moved quickly as she rented a second floor office, with aone lease for $3,400 a month, paying one monthâs rent in advance asa security deposit to apply to the end of the lease, and $3,400 forJuly 2016. She purchased some used computer equipment with softwarefrom her last employer, and ordered stationary and office suppliesthat cost $3,600 when they were delivered on June 29.

Websites by Marie opened for business on July 2, 2016. AlthoughMarie was not an accountant, she took stock of her companyâsfinancial position as she began to seek her first contracts. Thecompany had spent all but $12,600 of the cash that had been putinto the bank account, but it had some assets as well.

Assets Liabilities and Ownerâs Equity

Cash in bank $12,600 Loan $31,000

Office supplies 3,600 Marieâs equity 22,000

Equipment and software 30,000

Prepaid rent 6,800

Marie was a little worried that the cash had gone so quickly,but she also had confidence in herself and her willingness to workhard.

In the first few days, Marie lined up two webpage designprojects from local businesses. She spent part of each day workingon the projects, and the remainder of her time was spent lookingfor new clients. By early August she had hired four other designersat work and a steady stream of new work coming in by way ofreferrals. She also felt far too busy to attend to any financialaspects of the business. When clients paid, the money went into thebank account. The associates were paid weekly, and she paid rentand other bills when they were received. In the ninth week ofoperations, Marieâs Mom telephoned her to ask how things weregoing, and she could not answer the question with any confidence.It was time for an accounting, and the end of August would be agood time to do it.

Little found the following information she had accumulatedduring the two months of operations:

Clients had paid $40,000 for completed work, and two clientsstill owed a total of $8,900 for work that had been completed anddelivered to them. On August 31st, a client paid $2,000 in advancefor future work, however, there were no projects underway as theoffice closed on August 31 for the Labor Day weekend.

Additional office supplies had been purchased for cash of$1,000, and office supplies and stationery that had cost $2,800were still on hand.

Rent of $6,800 for August and September was paid in cash.Utility bills of $1,900, a repair of equipment of $2,900, andsalaries paid to designers of $21,100 (including Marie Little) werealso paid in cash, with $10,000 in salaries accrued, but not paidto date.

Additional equipment and software was purchased on August 27 for$14,000, with half of that amount being paid in cash and theremainder due one month later.

As Marie thought about the first two monthâs operations, she wasperplexed by the fact that cash in the bank had decreased eventhough she was sure the business was operating profitably.

She also wondered how to account for the following:

She had agreed to pay her mom interest on his loan of 4% peryear, but no interest had been paid so far.

The equipment and software were working out well, but Littleknew that they had a technological life of no more than three yearsfrom the time that she had purchased them.

In brief, Marie felt that the first two months had beensuccessful, but she was puzzled about how to draft meaningfulreports to mail to her brother.

You are a friend of Marie and a recent graduate of the MBAprogram. You are looking for work as a business consultant. Knowingyour excellent credentials, Marie has asked you to help her get herbusiness finances in order, report on the status of her businessand make any recommendations that you can to help her make herbusiness a success. She cannot pay you but she would be willing tohelp you set up your own webpage. Having taken financial accountingand eager to show off your newly acquired business skills, youaccept her offer. You want the report to be very professional soyou decide to perform the following:

Record journal entries to summarize the transactionsfrom June 20 to August 31.

Other assumptions:

The books are to be prepared using the accrual method ofaccounting.

The tax rate is 21%.

Depreciation is computed using the straight line method.

The business started on 6-20-15 when it was formed

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