   Chapter 17, Problem 1FSA

Chapter
Section
Textbook Problem

Financial statement analysisThe financial statements for Nike, Inc., are presented in Appendix D at the end of the text. Use the following additional information (in thousands): Accounts receivable at May 31, 2014 $3,117 Inventories at May 31,2014 4,142 Total assets at May 31, 2014 18,594 Stockholders’ equity at May 31,2014 12,000 Instructions1. Determine the following measures for the fiscal years ended May 31, 2016, and May 31, 2015 Round ratios and percentages to one decimal place. a. Working capital b. Current ratio c. Quick ratio d. Accounts receivable turnover e. Number of days’ sales in receivables f. Inventory turnover g. Number of days’ sales in inventory h. Ratio of liabilities to stockholders’ equity i. Asset turnover j. Return on total assets. k. Return on common stockholders’ equity l. Price-earnings ratio, assuming that the market price was$54.90 per share on May 29, 2016, and \$52.81 per share on May 30, 2015 m. Percentage relationship of net income to sales 2. What conclusions can be drawn from these analyses?

To determine

Financial Ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities, profitability, and overall performance of a company.

Given info: Financial Statements of N, Incorporation.

1.

To determine: The following ratios for three years:

1. (a) Working capital
2. (b) Current ratio
3. (c) Quick ratio
4. (d) Accounts receivable turnover ratio
5. (e) Number of days’ sales in receivables
6. (f) Inventory turnover ratio
7. (g)  Number of days’ sales in inventory
8. (h) Ratio of liabilities to stockholders’ equity
9. (i) Asset turnover ratio
10. (j) Return on total assets
11. (k) Return on common stockholders’ equity
12. (l) Price-earnings ratio
13. (m) Percentage relationship of net income  to sales
Explanation

Working capital is determined as the difference between current assets and current liabilities.

Formula:

2.

To determine

To draw: Conclusion about the analysis made

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