Balance Sheet and Nike Essay

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Assets at Nike

Current assets are an important element of the balance sheet. However, to understand what assets are available it is necessary examine how the assets classes are assessed and qualified. For example, receivables are an asset, as this is money which is earned and owed to the firm, but not yet received. Looking at the Nike 10-k, the accounts receivable is adjusted to allow for bad debts (Nike, 2016). The firm has many customers, some of whom may fail to pay their accounts; this may be due to bankruptcy, dispute or other reasons. Under the concept of prudence, Nike (2016) state that they make an assessment of the level of bad debt likely to be suffered and deduct this from the accounts payable shown as an asset. The firm does not provide details o the level of expected bad debt, merely stating it is based on historical analysis of past bad debt. Notably, the accounts receivable is shown on the balance sheet as a net value, after allowing for bad debts, meaning that the balance sheet for this category is only showing current accounts receivable. Where Accounts Receivable or not current, they are incorporated into the deferred income taxes and other assets, which include uncollectible accounts.

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The cash and cash equivalents, Cash is cash held, however cash equivalents usually refers to assets that are as liquid as cash (Libby, Libby, & Short, 2011). Nike (2016) state that the cash equivalents included several different types of assets, firstly there was $105 million in cash collateral which had been received from counterparties due to the firms hedging activities. A category which is often incorporated within cash equivalent, but is separated on the Nike balance sheet of the short-term investments, which included money market funds, corporate notes, U.S. Treasury bonds, and commercial paper (Nike, 2016). The cash equivalent also included some fixed income investments, overall the weighted average duration of cash equivalents was 91 days (90, 2016).

Inventories are also a current asset, and it is noted there is a danger of inventory obsolescence. Inventory valuation at Nike (2016), is valued at the lower of two valuation method; the cost of production, or market value. The cost of production is primarily the cost the company pays for the production of the goods, to outsource suppliers, in addition freight and transit fees, taxes, import duties, and insurance (like, 2016). The….....

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