Year 2 Year 1
Sales (revenues) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $30,601 $27,799
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,273 2,693
a. Determine the amount of change (in millions) and percent of change in net income from Year 1 to Year 2. Round to one decimal place.
b. Determine the percentage relationship between net income and sales for Year 2 and Year 1. Round to one decimal place.
c. What conclusions can you draw from your analyses?
Answers:
a. Net income: $3,273 – $2,693 = $580 million
$580/$2,693 = 21.5%
b.
Year 1: $2,693/$27,799 = 9.7%
Year 2: $3,273/$30,601 = 10.7%
c. Nike has increased net income between the two years by $580 million, or by 21.5%. This represents impressive earnings growth between the two years. Nike is able to accomplish this by growing sales and reducing expenses as a percent of sales between the two years.