Why use FIFO instead of LIFO?
Reasons: most other countries you have to use FIFO. If inventory turns over more than 4 times a year than FIFO/LIFO is the same. In periods of low inflation, LIFO & FIFO are pretty much the same. (difference so small) pg.87
Is LIFO an acceptable inventory accounting method?
Outside the United States, LIFO generally isn’t an accepted inventory accounting method. Under international financial reporting standards, companies must use FIFO. At the Commerce Department’s Bureau of Economic Analysis, however, statisticians use a method akin to LIFO to calculate inventory value that feeds into the measure of U. S.
Is overtaxation of inventories using the FIFO method back?
The problem of overtaxation of inventories using the FIFO method-almost forgotten because of recent low inflation rates-has returned. Ironically, it has returned during widespread supply disruptions, which is exactly when we should be encouraging inventory investment.
Does Nike ship directly to the customer?
In some instances, NIKE ships product directly from the supplier to the customer, with the related inventory and cost of sales recognized on a specific identification basis. Inventory costs primarily consist of product cost from NIKE’s suppliers, as well as inbound freight, import duties, taxes, insurance and logistics and other handling fees.
Is Nike FIFO or LIFO?
Inventories are valued on a Ñrst-in, Ñrst-out (FIFO) basis. During the year ended May 31, 1999, the Company changed its method of determining cost for substantially all of its U.S. inventories from last-in, Ñrst-out (LIFO) to FIFO. See Note 11.
What type of inventory system does Nike use?
RFIDNike is using RFID to track inventory.
What companies use FIFO and LIFO?
Just to name a few examples, Dell Computer (NASDAQ:DELL) uses FIFO. General Electric (NYSE:GE) uses LIFO for its U.S. inventory and FIFO for international. Teen retailer Hot Topic (NASDAQ:HOTT) uses FIFO. Wal-Mart (NYSE:WMT) uses LIFO.
What depreciation method does Nike use?
Nike uses FIFO. Nike reports property, plant, and equipment on its balance sheet and discloses the amount of depreciation for each year in its statement of cash flows.
What is Nike's supply chain strategy?
Nike's supply chain functions around three core organizational principles: outsourcing, to save costs; diversification, to minimize risk; and corporate social responsibility, to manage its impact on the world it works in.
What is Nike's sourcing strategy?
Our Approach to Sourcing. At Nike, we build long-term relationships with our contract manufacturing suppliers (suppliers) because we know having trust and mutual respect supports our ability to create product more responsibly, accelerate innovation and better serve athletes*.
What Company uses LIFO?
Here are some of the industries that often use the LIFO method: Automotive industries when needing to quickly ship. Petroleum-based production companies. Pharmaceutical industries with some products.
Does Apple use LIFO or FIFO?
Apple uses FIFO Following the FIFO model, Apple sells the units of its older models first.
What kinds of companies use FIFO?
Many companies that sell perishable commodities such as food or flowers use FIFO inventory tracking. Given that inventory has a limited shelf life in these industries, the FIFO method reduces losses.
How does Nike recognize revenue?
Wholesale revenues are recognized when title and the risks and rewards of ownership have passed to the customer, based on the terms of sale. This occurs upon shipment or upon receipt by the customer depending on the country of the sale and the agreement with the customer.
How does Nike manage its finances?
Nike shows the ability to generate revenue at healthy rates while keeping debt to a minimum and maximizing shareholder wealth. They pay their shareholders well through a Stable Dividend Policy as well as reinvesting capital back towards the company to expand its assets.
What assets does Nike have?
NIKE total assets for the quarter ending February 28, 2022 were $38.577B, a 6.61% increase year-over-year. NIKE total assets for 2021 were $37.74B, a 20.41% increase from 2020....Compare NKE With Other Stocks.NIKE Annual Total Assets (Millions of US $)2021$37,7402020$31,3422019$23,7172018$22,5369 more rows
Analysis
The following section summarizes insights on NIKE, Inc.'s Inventory Method:
How does NIKE's Inventory Method benchmark against competitors?
We've identified the following companies as similar to NIKE, Inc. because they operate in a related industry or sector. We also considered size, growth, and various financial metrics to narrow down the list to the ones listed below.
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The inventory record keeping method used by the company (FIFO / LIFO).
Definition of Inventory Method
The inventory record keeping method used by the company (FIFO / LIFO).
Who is responsible for the financial statements of Nike?
Management of NIKE, Inc. is responsible for the information and representations contained in this report. The financial statements have been prepared in conformity with the generally accepted accounting principles we considered appropriate in the circumstances and include some amounts based on our best estimates and judgments. Other financial information in this report is consistent with these financial statements.
What is the role of internal audit in Nike?
An Internal Audit department reviews the results of its work with the Audit Committee of the Board of Directors, present ly consisting of three outside directors. The Audit Committee is responsible for recommending to the Board of Directors the appointment of the independent accountants and reviews with the independent accountants, management and the internal audit staff, the scope and the results of the annual examination, the effectiveness of the accounting control system and other matters relating to the financial affairs of NIKE as they deem appropriate. The independent accountants and the internal auditors have full access to the Committee, with and without the presence of management, to discuss any appropriate matters.
What are Nike's fixed assets?
Thus, the principal fixed assets are corporate headquarters, research facilities, warehouses, and transportation equipment.
Why does Nike have an allowance for uncollectible accounts?
e. The allowance for uncollectible accounts arises because Nike recognizes revenue earlier than the time it collects cash. Because Nike is not likely to collect 100 percent of the amount reported as sales revenue, it must recognize an expense for estimated uncollectible accounts and reduce gross accounts receivable to the amount it expects to collect in cash.
How much did Nike pay in taxes in 2009?
he notes indicate that in 2009, income tax expense was $469.8 million, whereas the current amount of income taxes payable was $763.9 million, which means that Nike paid $294.1 million in tax that increased deferred tax assets or reduced deferred tax liabilities.
Does Nike have to report PP&E?
FASB requires Nike to report the proceeds from selling PP&E or divesting a subsidiary as an investing activitiy. The subtraction or addition nets the effect of the gain or loss to zero in the operating section of the statement of cash flows
Does Nike need external financing?
Cash flow from operations exceeded expenditures on property, plant, and equipment each year, so Nike did not need to rely on external financing for its capital expenditures.
Does Nike use straight line?
Nike uses the straight-line method for buildings and leasehold improvements, machinery, equipment, and software. Nike likely uses accelerated depreication methods for income tax reporting even though it uses straight-line methods for financial reporting.
Does Nike report depreciation?
Nike reports property, plant, and equipment on its balance sheet and discloses the amount of depreciation for each year in its statement of cash flows. Why doesnt depreciation expense appear among its expenses on the income statement?
