1. Demonstrate how the net change in cash and cash equivalents explains the change in cash and equivalents that appears on the Balance Sheet on the 10-K for 5/31/04 compared to 5/31/03. The 2004 figure was $828 million. The 2003 figure for Cash and Equivalents from the Balance Sheet was $634 million meaning that cash and cash equivalents increased by $194 million in the 12-month period under review.
We next look to the Consolidated Statement of Cash Flows. We are looking for the line: Net Increase in Cash and Equivalents. We note that for fiscal year 2004 that figure is $194 million corresponding to the net increase in cash and equivalents as reported on Nike's balance sheet for the same 12-month period under review.
2. We then turn our attention to the Statement of Cash Flows and to the specific section relating to Cash provided or used in investing activities. The following information is presented:
The largest cash outflow was $400.8 million relating to purchases of short term investments
The next largest cash outflow was $289.1 million relating to the acquisition of a subsidiary
The third use of cash was a $213.9 investment in property, plant and equipment.
Total cash used from investing activities was $946.
The next section of the Statement of Cash Flows we are told to review involves Cash provided or used by financial activities. In this area, we find the following insights about Nike's use of cash and equivalents:
The largest outlay was $419.8 million involving the repurchase of shares of Nike stock
The next largest outlay of cash involved paying down the company's ling term debt. Nike reduced its debt by $206.6 million.
The third largest use of cash by Nike involved sending dividends to common and preferred stockholders totaling $179.2 million.
The cash used in financing activities total $398.5 million
The piece of the puzzle that is missing is cash flows from operations. The hig<...