February 16, 2014
When analyzing the disclosure of an organization’s financial statement, it is very important to have it easy to understand for investors, shareholders, and consumers. They will need to understand how well the organization is doing financially and how the management of the organization uses the financial statement to make ensure that all the information is accurately reported according to the Securities and Exchange Commission (SEC). Nike is near Beaverton, Oregon. It is the world’s leading athletic footwear, designer, distributor, apparel, and equipment supplier for many varieties of fitness and sports activities. The paper will be analyzing the disclosure of NIKE’s financial statements.
Nike’s Asset’s One category to analyze is cash and cash equivalents which are the most liquid current assets. On the Balance sheet, cash has a much broader definition than just seeing it as cash on hand and cash in the bank. Cash equivalents play an important role within. Cash equivalents are short-term investments that are easily converted to cash but treated like cash. (Kieso, Weygant, & Warfield, 2012).
The disclosure on the financial statement as of fiscal 2014 second quarter ended November 30, 2013, stated that cash and equivalents is $2,086 million, short-term investments is $3,101 million, and total assets are $17, 820 million. The other assets were property equipment, intangible assets, goodwill, and accumulated depreciation. This means that the total assets have increased in the last year by 17%. Investors are looking for a company that it shows a consistent increase in its revenue. (Nike-inc-fy14-q2-earnings)
Nike’s Revenue Revenue is another short-term liquid asset that results from credit sales to customers. Credit is offered to increase sales, uncollectible accounts associated with credit sales should be charged as expenses in the period in which the sales are made. (Kieso, Weygant, & Warfield, 2012).
A small number of customers account for a large share of Nike net sales and accounts receivable. The Revenues as of fiscal 2014 second quarter ended November 30, 2013, for NIKE, Inc. increased 8 percent to $6.4 billion, up 9 percent on a currency neutral basis. Revenues for the NIKE Brand were $6.1 billion, up 9 percent on a currency neutral basis, with growth in every product type, geography and key category. Revenues for Converse were $360 million, up 11 percent on a currency neutral basis, driven by strong performance in our largest owned markets: North America, the United Kingdom, Europe, Japan, and China. The Nike’s net income for fiscal 2014 second quarter ended November 30, 2013, $1,317 million. (Nike-inc-fy14-q2-earnings)
The financial statement notes states that Nike Corporate revenues primarily consist of intercompany revenue eliminations and foreign currency revenue-related hedge gains and losses generated by entities within the NIKE Brand geographic operating segments and Converse through our centrally managed foreign exchange risk management program. It also consist of foreign currency gains and losses as a result of the difference between actual foreign currency rates and standard rates that are assigned to these entities that are used to record any non- functional currency revenues into the company’s functional currency. This is the positive contribution of hedges that are subtracted from the US dollars that are some portions are offset by hedges against a purchase in a different currency like Euros. The financial statement disclosure also states that for both the third quarter and the first nine months of 2011, there has been a decrease in corporate expenses. It can be a good when a corporation can cut down on expenses. However, if the reason why a company cut down on expenses is because they are downsizing then that maybe a sign that the company may be in trouble. The financial statement disclosure states that the reason