Chapter 4 Accounting

Chapter 4

A. Nike uses a Consolidated Income Statement format for fiscal year 2013. This format is used to present income statement information, because it only shows relevant data for operational activities.

Nike and Under Armour both use the consolidated income statement format.

* Nike chose to report earnings data from continuing operations, non-continuing operations and dividends declared per common share, to be reported

* Under Armour chose to use net income available per common share and weighted average common share outstanding to be reported.

B. Nike’s primary revenue sources in 2013 came from sporting footwear, apparel, equipment and accessories. With the majority of its revenue coming from the footwear. Which earned $14,539,000,000 in 2013.

C. In order to distinguish between operating and non-operating items, a company should report related costs with related revenues. And by doing that, it allows for the company to differentiate the gain or loss from each category of the company’s operations.

D.

a. Gross Profit

i. 2011: $9,202,000,000

ii. 2012: $10,148,000,000

iii. 2013: $11,034,000,000

b. Operating Expense

iv. 2011: $4,017,000,000

v. 2012: $4,458,000,000

vi. 2013: $5,035,000,000

c. Net Income

vii. 2011: $2,133,000,000

viii. 2012: $2,223,000,000

ix. 2013: $2,485,000,000

Compared to Under Armour, Nike has had better financial results. Under Armour’s Net Income

a. 2011: $96,919,000

b. 2012: $128,778,000

c. 2013: $162,330,000

Under Armour’s numbers are still in the millions, while Nike’s is in the billions, so Nike has clearly had better financial results over that period of time.

E.