****Use Nike\'s May 31, 2017 10-k to answer the following questions**** ***Pleas
ID: 2546533 • Letter: #
Question
****Use Nike's May 31, 2017 10-k to answer the following questions****
***Please clearly label answers to each question by A,B & C***
1. Financial Ratio Analysis
A. Using Nike's financial statements and any additional resources if necessary, determine which part of Nike’s Balance Sheet and Income Statement represent OPERATING assets, OPERATING liabilities and Operating income.
B.Then calculate NOPAT (Net operating profit after tax), NOA (net operating asset), RNOA (return on net operating asset), and Gross Profit Margin for 2017, 2016, and 2015 using the definition of these ratios. Compare these numbers and ratios across the three years and indicate any trends. Please make any necessary adjustment to income statement and balance sheet numbers as you see fit, e.g.: remove non-operating assets and liabilities from both the income statement and the balance sheet. For tax, please simply use Nike’s average tax rate when calculating NOPAT.
C. Show the decomposition of Nike’s RNOA into NOPM (net operating profit margin) and NOAT (net operating asset turnover) using the numbers from part a. for both 2017, 2016, and 2015. What do these ratios suggest about the change of performance of Nike across the past three years?
Explanation / Answer
A. operating assets are those assets which are used in the business for the generation of Revenue. in questin, the following items can be considered as operating Assets.
1. Cash
2. Accounts Receivables
3.Inventory
4. prepaid Expenses
5. property plant and Equipment
6. identifiable intangible items.
7. goodwill
Operating Liabilities.
Operating liablites are those current luiabilities which Arraised due to the current operation.
1. Accounts Payable.
2. Income tax liabilities.
3. Accrued Liabilities.
Operating income revenue from operating Activity.
B. operating profit before tax= Revenue from the operation - cost of goods sold- total selling and administration cost.
Operating profit after Tax= operating Profit Before tax *(100-Income tax rate for the year)
Computation of NOPAT
Particulars
2017($)
2016($)
2015(4)
Revenue
34,350
32,376
30,601
Cost of goods sold
19,038
17,405
16,534
Selling and administration Expenses
10,563
10,469
9,892
Operating Income Before tax
4,479
4,502
4,175
Tax Rate
13.2
18.7
22.2
Operating profit after tax
3,888
3,660
3,248
Computation Of Net operating Asset.
Year
Operating Assets (A)
Operating liability (B)
Net operating Asset (A-B)
2017
18101
5143
12958
2016
16638
5313
11325
2015
Cant perform due to lack of Data
Return On Net Operating Asset
Year
Net Operating Asset(A)
($)
Net operating income (B) ($)
RONOA=(B/A)8100
2017
12,958
38,88
30%
2016
11,325
36,60
30%
2015
Cant perform due to lack of Data
Computation of Gross profit Ratio
Year
Gross Profit ($)
Net Sales ($)
G.P .R= (G.P/Net sale)
2017
15,312
34,350
45%
2016
14,971
32,376
46%
2015
14,067
30,601
47%
From the Comparison Made Net operating after-tax income shows an increasing trend constantly, Net operating Asset also shows the same trend Return on Net operating Asset is constant in 2017 and 2016 but G.P Ration Shows a decreasing trend.
c.
Net operating Profit Margin
Year
Net operating Profit($)
Net Sale (4)
Net operating Ratio=(A/B)*100
2017
3,888
34,350
11%
2016
3,660
32,376
11%
2015
3,248
30,601
10%
This ration shows a constent trant.
Net operating Profit Margin
Year
NOA ($)
Net Sale (4)
Net operating Ratio=(A/B)*100
2017
12,958
34,350
38%
2016
11,325
32,376
34%
2015
Cant find due to lack of data
Turnover ration shows increasing trend
Particulars
2017($)
2016($)
2015(4)
Revenue
34,350
32,376
30,601
Cost of goods sold
19,038
17,405
16,534
Selling and administration Expenses
10,563
10,469
9,892
Operating Income Before tax
4,479
4,502
4,175
Tax Rate
13.2
18.7
22.2
Operating profit after tax
3,888
3,660
3,248
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.