Question

FROM NIKE SEC 10K FILING 2020 (available to look up on NASDAQ for further info)

Category: Operating Activities

1. Net income versus total for operating activities: Report these values.
2. What are the items of significance between net income and total for operating activities?
3. Is the business providing cash flow from operations?

Category: Investing and Financing Activities

1. Describe significant long-term assets (type and amount) purchased, sold, or retired during the current period as well as last year.
2. Describe significant financing activities used by the corporation to increase cash (or other assets): These would be related to long-term liabilities and stockholders’ equity.

Category: Analysis

1. Overall Cash Flow (total of three sections): Compare this year to last year.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	YEAR ENDED MAY 31,
(Dollars in millions)	2020			2019			2018
Cash provided (used) by operations:
Net income	$	2,539		$	4,029		$	1,933
Adjustments to reconcile net income to net cash provided (used) by operations:
Depreciation	721			705			747
Deferred income taxes	(380		)	34			647
Stock-based compensation	429			325			218
Amortization, impairment and other	398			15			27
Net foreign currency adjustments	23			233			(99		)
Changes in certain working capital components and other assets and liabilities:
(Increase) decrease in accounts receivable	1,239			(270		)	187
(Increase) decrease in inventories	(1,854		)	(490		)	(255		)
(Increase) decrease in prepaid expenses, operating lease right-of-use assets and other current and non-current assets	(654		)	(203		)	35
Increase (decrease) in accounts payable, accrued liabilities, operating lease liabilities and other current and non-current liabilities	24			1,525			1,515
Cash provided (used) by operations	2,485			5,903			4,955
Cash provided (used) by investing activities:
Purchases of short-term investments	(2,426		)	(2,937		)	(4,783		)
Maturities of short-term investments	74			1,715			3,613
Sales of short-term investments	2,379			2,072			2,496
Additions to property, plant and equipment	(1,086		)	(1,119		)	(1,028		)
Other investing activities	31			5			(22		)
Cash provided (used) by investing activities	(1,028		)	(264		)	276
Cash provided (used) by financing activities:
Proceeds from borrowings, net of debt issuance costs	6,134			—			—
Increase (decrease) in notes payable, net	49			(325		)	13
Proceeds from exercise of stock options and other stock issuances	885			700			733
Repurchase of common stock	(3,067		)	(4,286		)	(4,254		)
Dividends — common and preferred	(1,452		)	(1,332		)	(1,243		)
Other financing activities	(58		)	(50		)	(84		)
Cash provided (used) by financing activities	2,491			(5,293		)	(4,835		)
Effect of exchange rate changes on cash and equivalents	(66		)	(129		)	45
Net increase (decrease) in cash and equivalents	3,882			217			441
Cash and equivalents, beginning of year	4,466			4,249			3,808
CASH AND EQUIVALENTS, END OF YEAR	$	8,348		$	4,466		$	4,249
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest, net of capitalized interest	$	140		$	153		$	125
Income taxes	1,028			757			529
Non-cash additions to property, plant and equipment	121			160			294
Dividends declared and not paid	385			347			320

Answer 1

Answer to question

Category: operating Activities

Net income Vs Operating Activities

Category	2020	2019	2018
Net income	$2,539	$4,029	$1,933
operating Activities	$2,485	$5,903	$4,955
Differences	$54	($1,874)	($3,022)

Items of Signifcance between Net Income and Operating activities are:

Income after tax in income statement is arrived after adjusting earned/accrued revenue in meeting various expense be operating, financing, cash, non-cash, investing, etc., which thus shows overall profitability status of an organization.

Whereas, CFOA (Cash flow from operating activities) in cash flow statement(CFS) is only concerned with Operating activities and hence under indirect method where we start our CFS (cash flow statement) from Income derived from P& L, adjustment for the items, which has not been dealt with cash ,or dealt in cash but non-operating that is belong to other(financing and investing)activities ,shall be excluded to arrive at net cash inflows/outflows from operation .Due to such adjustments and adjustment for change in working capital ,the income from Income statement and CFOA are different from each other.

Business is said to provide cash flow from operarion in case cash flow from operarting activities shows positive inflows instead of outflows. Here , as from table above also , it is evident that cash flow from operation provides positive flows,so business in this case is providing cash flow from operation.

Category: investing and Financing Activities

Significant long term assets purchased,sold and retired during current period and last financial year are:

As per cash flow statement, the entity has not entered in any purchase or sale of long term assets except for the Property , Plant and Equipment in current year as well as previous year.

Long term assets are those whose have substantitve life i.e. more than one year of life period.Here ,remaining investing activities are for Purcahse/sale.retirement of Short term investments and not long term one.

Detials of other investing activities are not provided here into.

Significant Financing Activities to Increase cash or other assets:

1. buy back of assets in all three years with increasing amonts. i.e.cash outflow from the entity.

2. Proceeds from long term borrowings recived in year 2020 i.e. cash inflow to the entity

3. Proceeds from exercise of Stock option i.e. cash inflows to the entity.

Category Analysis: Particulars 2020($) 2019($) 2018($) Trend Cash flow from opeartion (CFOA) $2,485 $5,903 $4,955 Increasing and then Decreasing Cash flow from Investing Activities(CFIA) ($1,028) ($264) $276 Decreasing Cash flow from Financing Activities(CFFA) $2,491 ($5,293) ($4,835) Increasing

Here, from table it is very clear that ,CFOA of the entity in prwevious years has made more inflows as compared to current year

CFIA has not made any inflow rather there is maximum outflow in previous as well as current year.

CFFA has shows net inflow in current year as compared to previous year.